I think this must be known bug, but there is no info that it will be fixed in next patch. Try this: Start 1066 scenario as Germany, find create title choice - its is grey, no new titles avaliable. Conquer Triebe of Mecklemburg, then try create title - there is now 17 titles!!! This bug occured sometimes too when is bishopric created (must be then new land from pagans/muslim taken ...). Tested in 1.03B patch.
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