The error might still happen if the same vm name is used again. This can happen if the desktop that is being recreated is the highest number'ed one. As an example, if you have [vm-1, vm-2, vm-3] in your pool and vm-3 is the first desktop to be recreated, then the name allocation will choose vm-3 again. On the contrary if either of vm-1 or vm-2 were deleted first then this issue will not happen. As you can see this becomes unlikely for larger sized pools.

We are sorry that you are still seeing this issue, but Instant Clones feature has undergone proper testing cycle. As with any piece of complicated s/w there are bound to be bugs and I would agree that this is a particularly critical one. We would encourage you to contact GSS and register your case. This would help us in releasing the fix for this problem earlier.