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Up to Ocata (I haven't used Pike yet), the openstack server create command doesn't create volumes by default.
The launch dialogue in Horizon has a tab named source. There, select image as the boot source and reset the switch named Create New Volume.
It would be interesting to know how you launch instances. From your description, I guess you launch them so that volumes are created, and something is wrong with the Cinder setup, which causes your problems.
