I actually think this is an oddity in libvirt. I've seen something like
this where I had to run "virsh capabilities" before virsh would realise
that I could actually run any kvm guests. I haven't seen this problem
for a while though. Are you still experiencing this bug?

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ubuntu-vm-builder crashed with libvirtError in defineXML()
https://bugs.launchpad.net/bugs/530550
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