Created attachment 1222438 [details]
engine log

Description of problem:
Display type is considered a mandatory field of instance types, so when creating a vm from an instance type and a template, the vm should inherit the display type from the instance type.
When creating a vm via UI this is working as expected.
When creating the vm via API the vm will inherit the template's display type e.g.:

<vm>
    <name>instance_type_test_vm</name>
    <cluster id="{cluster_id}"/>
    <instance_type id="{instance_type_id}"/>
    <template id="00000000-0000-0000-0000-000000000000"/>
</vm>



Version-Release number of selected component (if applicable):
rhevm-4.0.6-0.1.el7ev.noarch

How reproducible:
always

Steps to Reproduce:
1. Set an instance type with display type vnc.
2. Create a template with display type spice
3. Create a vm in UI with the template and the instance type.
4. Create another vm via API with the same template and instance type

Actual results:
The first vm created in UI will have display type = vnc.
The 2nd vm created in API will have display type = spice.

Expected results:
Both vms should have display type set to vnc.

Additional info: