Not only do I have the same problem, but if I try to create Windows XP
using an ISO image, it just doesn't get past the "Assigning storage
space" screen. When I click "Forward", nothing happens at all.

This is not the case when I try for example openSUSE. It creates the
disk, but then it fails to boot from the ISO image. I'm guessing this is
not resolved until some later release of kvm, and even then it works
only with some tricks, but that is beside the point. The problem is how
to use virt-manager. Did anybody even test it before releasing it?

Now, kvm works fine, my previously created VM using CLIs works when I
run it from the command line, and the good thing is that "-std-vga"
option works.

-- 
vm cannot access cd-rom unless run as root
https://bugs.launchpad.net/bugs/196850
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