I put selinux in permissive mode, but same issue.
I have found that the directory being made by vdsm for the mount is owned by root:
drwxr-xr-x 1 root root 0 Oct 4 02:28 10.78.71.1:_vmdata
If i chown vdsm:kvm ahd make it 777 then try again the storage domain is succesfully
created. Why would vdsm be making a directory with the wrong ownership?