2018-08-28 13:08:24,081+0300 INFO  (vm/2825b884) [root] /usr/libexec/vdsm/hooks/before_device_create/10_allocate_net: rc=2 err=vm net allocation hook: [unexpected error]: Traceback (most recent call last):

  File "/usr/libexec/vdsm/hooks/before_device_create/10_allocate_net", line 105, in <module>

    main()

  File "/usr/libexec/vdsm/hooks/before_device_create/10_allocate_net", line 93, in main

    allocate_random_network(device_xml)

  File "/usr/libexec/vdsm/hooks/before_device_create/10_allocate_net", line 62, in allocate_random_network

    net = _get_random_network()

  File "/usr/libexec/vdsm/hooks/before_device_create/10_allocate_net", line 50, in _get_random_network

    available_nets = _parse_nets()

  File "/usr/libexec/vdsm/hooks/before_device_create/10_allocate_net", line 46, in _parse_nets

    return [net for net in os.environ[AVAIL_NETS_KEY].split()]

  File "/usr/lib64/python2.7/UserDict.py", line 23, in __getitem__

    raise KeyError(key)

KeyError: 'equivnets'

And /usr/libexec/vdsm/hooks/before_device_create/10_allocate_net comes from vdsm-hook-allocate_net rpm which is not installed by default.

The point is why you have it during hosted-engine-setup: did you manually installed vdsm-hook-allocate_net ? do you really need it?

Can you please remove it and try to deploy again?