when i try to create storage gateway in AS using terraform, i face "error: retrieving activation key from ip address making http request timeout"

Please refer my script below, this worked fine earlier and now it times out when retrieving activation key. All the resources will be created except gateway.

Security group code is deleted as i am unable to post my question, ports allowed in inboud - 445,159,139,80,22 and all ports in icmp outbound - all ports

data "aws_ami" "latest_ami" {
  most_recent = true

  filter {
    name   = "name"
    values = ["*aws-storage-gateway*"]
  }

  owners = ["amazon"]
}

resource "aws_instance" "file_gateway_instance" {
  ami           = data.aws_ami.latest_ami.id
  instance_type = "m5.xlarge"
  key_name      = var.keypair_name
  subnet_id     = var.subnet_id
  vpc_security_group_ids = [aws_security_group.file_gateway_sg.id]
  user_data = <<-EOF
    #!/bin/bash
    # Install file gateway
    curl https://filesystems-manager-us-east-1.s3.us-east-1.amazonaws.com/latest/install.sh | sudo bash
  EOF

   tags = {
      Name = "file_gateway"
   }
}

data "aws_ssm_parameter" "domain_creds" {
  name            = "/secrets/ad/admin-password"
  with_decryption = true
}

resource "aws_storagegateway_gateway" "file_gateway" {
  gateway_name       = var.gateway_name
  gateway_timezone   = "GMT"
  gateway_type       = "FILE_S3"
  gateway_ip_address = aws_instance.file_gateway_instance.private_ip
  smb_active_directory_settings {
    domain_name = var.domain_name
    username = "admin"
    password = data.aws_ssm_parameter.domain_creds.value
  }
}

The first thing I think might happen here is that file_gateway_instance is in a subnet that does not have internet access.

From your subnet I assume it is a private subnet as you are not setting a public IP for the instance. If so, make sure you either have a NAT gateway setup in that subnet with the route 0.0.0.0/0

You can debug this by enabling VPC flowlogs and then filtering on the ENI of the EC2 instance and see if the outbound traffic is allowed (might also be NACL of the subnet blocking the traffic).