This has been fixed in 7.3.z with #1410860, RHBA-2017-0103
It is also fixed in the 7.4 firewalld rebase.

Which firewalld version are you using?

sure ryan and Michal, will retest with latest RHV-H and update the bug. 

Does this iso http://download-node-02.eng.bos.redhat.com/devel/candidate-trees/RHVH-4.1-20170425.3/compose/RHVH/x86_64/iso/ has the latest firewalld which is firewalld-0.4.3.2-8.1 ?

It does.

firewalld-0.4.3.2-8.1 was present in both 4.1.1-1 and 4.1.1-2 squashfs images, and that's for 4.1.1-2

Thanks Ryan. Will test and update the bug.

Created attachment 1277338 [details]
screenshot of failure with .bak files

Do you still get the .bak files with firewalld-0.4.3.2-8.1?

Could it be that the .bak file has been there already?

This was a fresh installation and i did not have .bak files before that.

I am sorry, but .bak is the expected extension for backup files. firewalld has been using .old before, which broke NM and the network service.

From /etc/init.d/network:

# find all the interfaces besides loopback.
# ignore aliases, alternative configurations, and editor backup files
interfaces=$(ls ifcfg-* | \
            LC_ALL=C sed -e "$__sed_discard_ignored_files" \
                       -e '/\(ifcfg-lo$\|:\|ifcfg-.*-range\)/d' \
                       -e '{ s/^ifcfg-//g;s/[0-9]/ &/}' | \
            LC_ALL=C sort -k 1,1 -k 2n | \
            LC_ALL=C sed 's/ //')

From /etc/init.d/functions :

# A sed expression to filter out the files that is_ignored_file recognizes
__sed_discard_ignored_files='/\(~\|\.bak\|\.orig\|\.rpmnew\|\.rpmorig\|\.rpmsave\)$/d'

oVirt should use a similar filter.

I am closing this as NOT A BUG due to comment #14.