Ori, were you able to reproduce this? I've hit the same issue as you in your comment from 20170503T15:43:45 . The template always has Thin Provisioning, even if the VM it was created from was Preallocated. I am using RHEV 3.6. That means I am not even able to do the given scenario in RHEV itself, let alone through Satellite.

I've updated the subject, as it better describes the reproducing steps, as well as the redmine issue it's connected to. Another reason is we don't have a compute resource available where we could successfully set the allocation policy of the disk in template to "Preallocated". It's always thin in setups available to us (perhaps related to https://access.redhat.com/solutions/3369061)

However, as the step 4. in the reproducer describes, it's still expected to check the 'preallocated' policy when creating the host, so it should not matter what type of the allocation policy the template actually has, in connection to this BZ or the cases attached to it.

Verified with Sat 6.4 snap 22.

Used RHEV 4 because I wasn't able to use RHEV 3.6 due to different bug and RHEV 3 ELS ends in 5 days.

This BZ has been changed to only require allocation policy to propagate from Satellite to RHEV.

1) Have a RHEV, add it as a CR to Sat
2) Have a VM in RHEV, add it as Image to Sat
3) Host -> Create
4) OS -> Image Based, select the image
5) VM -> check Preallocated
6) Fill the rest, submit
7) Check in RHEV that the newly created VM has preallocated disk

In the end and after some workarounds, I was also able to verify this on RHEV 3.6.

Since the problem described in this bug report should be
resolved in a recent advisory, it has been closed with a
resolution of ERRATA.

For information on the advisory, and where to find the updated
files, follow the link below.

If the solution does not work for you, open a new bug report.

https://access.redhat.com/errata/RHSA-2018:2927