If you use Xen and get an error "Failed to find an unused loop device" when you try to create a guest then you are probably using disk images and have run out of loop devices. Each guest uses at least two loop devices. Modify (or create) a file called /etc/modprobe.d/local-loop and add this line:
```bash
options loop max_loop=64
```
Use a number suitable for your needs. With 64 loop devices you can run up to 32 guests on your host, assuming you aren't using loop devices for any other purposes.