Unable to resize a running instance on an OpenStack compute node

Issue

• Resizing a nova instance from the CLI fails with:

  # nova resize myinstance 4 --poll
  Server resizing... 0% complete
  Error resizing server
  

• Not able to resize Instance. The following error is shown:

  # nova resize resize-test m1.small --poll 
  
  Server resizing... 0% complete
  Error resizing server
  ERROR (InstanceInErrorState): Unexpected error while running command.
  Command: ssh 172.x.x.1 mkdir -p /var/lib/nova/instances/8cb728bb-7f28-46f4-b650-7fe2cfb5bdbb
  Exit code: 255
  Stdout: u''
  Stderr: u'Host key verification failed.\r\n'
  

• Cannot resize an instance from horizon dashboard.
• "This account is currently not available" message comes when user doesn't have valid shell.