Openstack is starting the instances in UTC time when using kvm, the simulated guest hardware clock is always to UTC. This is independent from the host clock setting.
Windows OSes only assumes the hardware clock is set to local time so it boots up in UTC time until the time synchronization against the time.microsoft.com finishes and corrects it to the desired time zone.
To change the hardware clock in windows, you can add this registry entry : [HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\TimeZoneInformation] "RealTimeIsUniversal"=dword:00000001
That will boot the instance with the correct time, since the hardware inside the guest and host are lining using the same time zone information.
Additionally please note, that Microsoft Windows Server 2008/7 had a High CPU issue when changing to DST.
That has been fixed with the hot fix :
2800213 High CPU usage during DST changeover in Windows Server 2008, Windows 7, or Windows Server 2008 R2
Update per 6/25/2015: This hot-fix is only applicable for older Openstack releases (Havana and lower). Newer releases of Openstack do start the guest inside the localtime zone, local to the host. Additionally Openstack needs to be aware that the image you’re using is a window guest and you have to set the os_type image property to windows. But beware for errors around those glance properties. There are known issues that the image properties are not retained if you create new images from existing nova instances.