@BharatKumarKobagana, your steps are perfect but, it fails in few systems saying "No such File or Directory" during physical volume creation. For that we found a solution where we have to format the file device and then need to be assigned back to loopback device.

STEPS:

1. Create a 8G loopback device using: dd if=/dev/zero of=NewDrive.img bs=1G count=8

   #Additional Step

2. Device file format for some ext3 or other: mkfs.ext3 NewDrive.img

3. Create loop back device: losetup /dev/loop0 NewDrive.img

4. Then create physical volume on it: pvcreate /dev/loop0

5. Now you can create volume group: vgcreate "cinder-volumes" /dev/loop0

In that case in a fresh installation , what would be the ideal partitioning during a fresh Ubuntu install? (what partition formats etc. ) ??

In your case /dev/sda1 is already mounted as root file system - you cannot make PV on it. It will be better if you will have a second HDD, or even to have RAID for it (depending on your needs). If you want only prove idea you need to make empty partition for PV.

for example. make /dev/sda1- for root fs - I think 20GB will be enough /dev/sda2 - for SWAP for example 5G as in your case /dev/sda3 - all other space - is about 800G for PV for cinder-volumes

when you make pvcreate /dev/sda3 ... vgcreate cinder-volumes /dev/sda3 ... and so on

you could just do a vgextend "cinder-volume-name" /dev/loopX on the newly created physical volume to add that space onto the existing backend as well.