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I presume the template you were using is this one (they were moved a little since)

that kind of error with the Instance successfully created most probably means that the init-script failed, did not run to its end enough to signal the success back (this particluar line in the template was not reached

can you try to boot the instance with the same params manually, login there and repeat the steps from the init-script by hand? As I see there is some jumping around SELinux in the script, I suspect that something around it might be a culprit (e.g. updated selinux-policies with newer policies that block some additional operations).