Environment:
ovirt-engine on Fedora 16
ovirt-engine-setup-plugin-allinone-3.1.0_0001-1.8.fc16.x86_64
ovirt-engine-sdk-1.6.2-1.fc16.noarch

Scenario:
1. Run engine-setup which allinone-plugin is installed
2. Choose using vdsm on that machine in the engine-setup wizard and provide an existing empty dir for local storage creation

Result:
Local storage creation on the given path fails

From engine-setup's log:
2012-04-25 11:09:09::INFO::all_in_one_100::287::root:: Adding local storage domain
2012-04-25 11:10:09::ERROR::all_in_one_100::290::root:: Traceback (most recent call last):

    File "/usr/share/ovirt-engine/scripts/plugins/all_in_one_100.py", line 288, in addStorageDomain
        controller.CONF["API_OBJECT"].storagedomains.add(sdParams)
    File "/usr/lib/python2.7/site-packages/ovirtsdk/infrastructure/brokers.py", line 2739, in add
        body=ParseHelper.toXml(storagedomain))
    File "/usr/lib/python2.7/site-packages/ovirtsdk/infrastructure/proxy.py", line 42, in add
        return self.request('POST', url, body, headers)
    File "/usr/lib/python2.7/site-packages/ovirtsdk/infrastructure/proxy.py", line 52, in request
        conn=self.getConnectionsPool().getConnection())
    File "/usr/lib/python2.7/site-packages/ovirtsdk/infrastructure/errors.py", line 96, in __init__
        f_detail = params.parseString(res)
    File "/usr/lib/python2.7/site-packages/ovirtsdk/xml/params.py", line 16624, in parseString
        doc = parsexml_(StringIO(inString))
    File "/usr/lib/python2.7/site-packages/ovirtsdk/xml/params.py", line 70, in parsexml_
        doc = etree_.parse(*args, kwargs)

    File "lxml.etree.pyx", line 2942, in lxml.etree.parse (src/lxml/lxml.etree.c:54187)
    File "parser.pxi", line 1545, in lxml.etree._parseDocument (src/lxml/lxml.etree.c:79661)
    File "parser.pxi", line 1573, in lxml.etree._parseMemoryDocument (src/lxml/lxml.etree.c:79932)
    File "parser.pxi", line 1452, in lxml.etree._parseDoc (src/lxml/lxml.etree.c:78774)
    File "parser.pxi", line 960, in lxml.etree._BaseParser._parseDoc (src/lxml/lxml.etree.c:75389)
    File "parser.pxi", line 564, in lxml.etree._ParserContext._handleParseResultDoc (src/lxml/lxml.etree.c:71739)
    File "parser.pxi", line 645, in lxml.etree._handleParseResult (src/lxml/lxml.etree.c:72614)
    File "parser.pxi", line 585, in lxml.etree._raiseParseError (src/lxml/lxml.etree.c:71955)

XMLSyntaxError: Space required after the Public Identifier, line 1, column 47
...
...
2012-04-25 11:10:09::ERROR::engine-setup::2709::root:: Traceback (most recent call last):

    File "/usr/bin/engine-setup", line 2703, in <module>
        main(confFile)
    File "/usr/bin/engine-setup", line 2494, in main
        runSequences()
    File "/usr/bin/engine-setup", line 2440, in runSequences
        controller.runAllSequences()
    File "/usr/share/ovirt-engine/scripts/setup_controller.py", line 54, in runAllSequences
        sequence.run()
    File "/usr/share/ovirt-engine/scripts/setup_sequences.py", line 152, in run
        step.run()
    File "/usr/share/ovirt-engine/scripts/setup_sequences.py", line 59, in run
        function()
    File "/usr/share/ovirt-engine/scripts/plugins/all_in_one_100.py", line 291, in addStorageDomain
        raise Exception(ERROR_ADD_LOCAL_DOMAIN)

Exception: Error: could not add local storage domain