Look for a directory in ~/Library/Developer/Xcode/iOS DeviceSupport/ that matches the version of the OS on your device. Please zip it up and attach it to a radar at http://bugreport.apple.com.
After doing that, I suspect that if you delete that directory and restart, you might be able to get past the issue.
I am encountring this issue for 9.2.1. Your solution seems to work for every one. But unfortunately in my case this doen't fix the issue.
I have latest OSX El Capitan 10.11.3. (15D21)
Xcode 7.2.1 (7C1002)
Problem is I don't see a subdirectory in above mentioned directory matching my iOS ( which is 9.2.1). Maximum I have is 9.2 (13C75). And if I remove/delete this and restart my XCode or even my system I start getting "Could not find Developer Disk Image".
Please let me, is there any way to solve this. I have reported this on bugreport.apple.com and there is no reply from Apple yet.
Thanks in advance
I followed your advice but it simply led to another error message.
Before Deleting the directory iOS11(15A372)
Error Message: "dyld_shared_cache_extract_dylibs failed"
After Deleting the directory iOS11(15A372)
Error Message: "Could not locate device support files - This iPhone 6S is running iOS11(15A372) which may not be supported by this version of Xcode"
My phone's operating system is iOS11.0 and it's Xcode 9. I've also tried deleting and re-installing XCode to no avail.