Created attachment 776440 [details]
engine.log

Description of problem:
In API, default display type is applied to a new VM when created from a template with a different display type.

Version-Release number of selected component (if applicable):
rhevm-3.2.1-0.39.el6ev.noarch

How reproducible:
100%

Steps to Reproduce:
1. Create VM with display type (vnc in 3.2) different from default (spice in 3.2):
<vm>
<name>vnc-orig</name>
<cluster><name>XXX</name></cluster>
<display><type>vnc</type></display>
<template><name>Blank</name></template>
</vm>

2. Create template from VM:
<template>
<name>vnc-temp</name>
<vm id="XXX"/>
</template>

(at this point template should have the same display type as the original VM)

3. Create VM from template:
<vm>
<name>vnc-api-clone</name>
<cluster><name>XXX</name></cluster>
<template><name>vnc-temp</name></template>
</vm>

Actual results:
Second VM's display type is the same as default (spice in 3.2)

Expected results:
Second VM's display type should be the same the original VM's.

Additional info:
Reproducible in 3.3 as well (with vnc being default).
I wasn't able to reproduce this using webadmin.