In Openstack, is it possible to create compute nodes with no hard drives and use PXE in order to boot the host's system and therefore launch instances with no local drive which is needed to boot the VM's image.
If not what's the minimum storage needed to be given to hosts in order to get fully functional system.
You can have a host with no disk. You can use this host to be your main openstack server. It is possible to mount remote shares to this server for persistent storage. An example for such a configuration would be a remote NFS share as your backend.
Having remote servers allow much simpler and cheaper scalability, as this way you can have bulk disk servers and bulk compute nodes.
In order to ensure that you have no performance degregation, sufficient backbone network infrastructure is needed. (At least a 10Gbps network!)