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Attachment of HD in KVM is equivalent to attaching a Openstack Cinder Volume to Instance. 1: Create a cinder Volume of appropriate size say 20 GB. 2: Bootup an instance with Ubuntu ISO file and attach Cinder Volume to it. 3: Ubuntu will detect this volume and you can install Ubuntu on it. 4: After installation is complete, you can delete this VM, create a new VM and boot it up from Cinder Volume NOT through .ISO file.

P.S: you can also install Ubuntu on ephemeral disk as you did, but every time when you boot up, it will boot from .ISO file and you have to click on power icon on top right corner of installation screen and select reboot , now VM will boot from ephemeral disk .