Add the storage issue as known issue

Author: rcheeran

AKS-Arc/aks-troubleshoot.md

@@ -24,6 +24,7 @@ The following sections describe known issues for AKS enabled by Azure Arc:
 
 | AKS Arc CRUD operation | Issue | Fix status |
 |------------------------|-------|------------|
+|AKS steady state        |[Storage provisioning issue impacting cluster and node pool creation](issue-storage-provision.md)|Active|
 | AKS cluster delete     | [Deleted AKS Arc cluster still visible on Azure portal](deleted-cluster-visible.md) | Active |
 | AKS steady state       | [AKS Arc telemetry pod consumes too much memory and CPU](telemetry-pod-resources.md) | Fixed in 2507 release  |
 | AKS cluster create     | [Can't create AKS cluster or scale node pool because of issues with AKS Arc images](gallery-image-not-usable.md) | Fixed in 2507 release |

AKS-Arc/known-issue-storage-provision.md

@@ -0,0 +1,58 @@
+---
+title: Troubleshoot issue where storage provisioning fails
+description: Learn how to troubleshoot and mitigate the issue when storage provisioning fails
+ms.topic: troubleshooting
+author: rcheeran
+ms.author: rcheeran
+ms.date: 07/23/2025
+ms.reviewer: abha
+
+---
+
+# Troubleshoot storage provisioning issues observed during cluster and node pool creation
+
+This article describes the issue where new AKS Arc nodes are created on a single storage path/volume of the Azure Local cluster, breaking the expected round-robin distribution amongst volumes. Over time, this might cause insufficient disk space on that path, potentially resulting in deployment failures.
+
+## Symptoms
+
+During cluster creation or node pool creation and scale operations you might see the following error message: 
+
+```bash
+The system failed to create <Azure resource name>: There is not enough space on the disk.
+```
+
+
+## Cause
+
+- The issue is caused by a recent regression introduced in Azure Local version 2506. 
+
+## Mitigation
+
+This issue was fixed in AKS on [Azure Local, version 2507](/azure/azure-local/whats-new?view=azloc-2507#features-and-improvements-in-2507). That said, this mitigation works only when you create new Azure Local instances with 2507 version. Upgrading from Azure Local versions 2506 to 2507 will not resolve the issue.
+
+### Workaround for Azure Local versions 2506
+
+This issue only affects clusters in Azure Local version 2506. Install the [support module](/azure/aks/aksarc/support-module.md) and run the commands provided in this module. 
+
+```powershell
+Test-SupportAksArcKnownIssues
+```
+
+Run the following the command to fix this known issue on your deployment.
+
+```powershell
+Invoke-SupportAksArcRemediation
+```
+
+## Verification
+
+Once the fix is done, you should be able to create your clusters and node pools. If you still encounter issues feel free to reach out to Microsoft Support.  
+
+## Contact Microsoft Support
+
+If the problem persists, collect the [AKS cluster logs](get-on-demand-logs.md) before you [create a support request](aks-troubleshoot.md#open-a-support-request).
+
+## Next steps
+
+- [Use the diagnostic checker tool to identify common environment issues](aks-arc-diagnostic-checker.md)
+- [Review AKS on Azure Local architecture](cluster-architecture.md)