I did some further digging on this and it appears that it only happens
when the virtual machine definition includes a floppy device, either via
-drive or -fda.  Removal of the floppy device results in being able to
successfully boot and install Windows XP.  However, this does seem to
prevent one from providing the virtio drivers for storage during
installation as the additional storage drivers are provided via floppy.

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https://bugs.launchpad.net/bugs/1074460

Title:
  kvm: windows xp installation hangs after "Setup is inspecting your
  computer's hardware configuration"

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