If you are using Xen and get an error Device xxxxx (xxx) could not be connected. Failed to find an unused loop device when you try to create a guest. This is because you are out of loop devices.

Run this on command line:
echo "options loop max_loop=32" > /etc/modprobe.d/xen

With the value 32 you are able to run 16 Guests on your host, assuming you aren’t using loop devices for other purposes. Use a number suitable for your needs.

Shutdown your guests and run this on command line:
rmmod loop && modprobe loop

Show all loop devices:
ls -l /dev/ | grep loop