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I created a object "XYZ" and set its OWD setting default to "Public Read/Write" but still profile don't have right to create and view the records of this project. I am explicitly giving "All Permission" to all the profile on this "XYZ" object.
Why is this happen? If my OWD setting is "Public Read/Write" then i believe all profile should have default rights to edit/create the records.
Is there any way through which i can assign "Modify All" right to all profile on a particular object?
OWD is the most restrictive permission in terms of data sharing, it controls what the least amount of access is to the object. Since you've opened this up to Public / Read Write, the spotlight shifts to the Profile.
The Profile Controls whether you can Read, Create, Edit, Delete an Object's records, if you've granted View All and Modify All on the Object, users assigned to that Profile should be able to do pretty much anything with records of those objects.
The last piece in the puzzle could be Record Types, for a User to be able to create records of a certain RecordType, it must be available to their Profiles.
Here's something I wrote earlier explaining this, which might help.
Have a read of this https://na10.salesforce.com/help/doc/en/managing_the_sharing_model.htm
Org Wide Defaults set the baseline for sharing access to records. Object permissions and Field permissions of the profile are still respected. On a profile you can, if you want, set "modify all" for a particular object (XYZ).
