Azure ACS AzureFile Dynamic Persistent Volume Claim
I emailed microsoft azure support about this and received an answer.
There is a bug in acs kubernetes version 1.7.7 that does not allow for dynamic persistent volume claims to work if your --cluster-name value in “/etc/kubernetes/manifests/kube-controller-manager.yaml” of the master node VM is greater than 16 characters. Very obscure bug. The fix is to upgrade your cluster or re-deploy with a different name.
Here is bug report: https://github.com/andyzhangx/demo/blob/master/issues/azurefile-issues.md#4-azure-file-dynamic-provision-failed-due-to-cluster-name-length-issue