Error: Device (vbd) could not be connected. /etc/xen/scripts/block failed

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Error on xen vps :

[root@1test~]# xm create /home/xen/vm747/vm747.cfg
Using config file "/home/xen/vm747/vm747.cfg".
Error: Device 5632 (vbd) could not be connected. /etc/xen/scripts/block failed; error detected.

Checking free loop devices :
[root@test ~]# losetup -f
losetup: not found any public free loop device

Checking status of loop devices :
[root@test ~]# losetup -a
/dev/loop0: [fd1c]:3997699 (/home/solusvm/xen/iso/2003_server.iso)
/dev/loop1: [fd1c]:3997700 (/home/solusvm/xen/iso/2008_Spanish_32.iso)
/dev/loop2: [fd1c]:3997709 (/home/solusvm/xen/iso/2003server.iso)
/dev/loop3: [fd1c]:3997698 (/home/solusvm/xen/iso/2008_Spanish_x64.iso)
/dev/loop4: [fd1c]:3997709 (/home/solusvm/xen/iso/2003server.iso)

/dev/loop5: [fd1c]:3997702 (/home/solusvm/xen/iso/Windows_2008_R2_64Bit_Spanish.iso)
/dev/loop6: [fd1c]:3997700 (/home/solusvm/xen/iso/2008_Spanish_32.iso)
/dev/loop7: [fd1c]:3997700 (/home/solusvm/xen/iso/2008_Spanish_32.iso)
[root@test ~]#

This can be solved by unmounting unused loop devices from other vps.

Or you can just increase the no.of loop devices.
#vim /etc/modprobe.conf
...
options loop max_loop=64
...