This is installing an openSUSE 10.3 RC1 PV guest on an openSUSE 10.3 RC1 domain0.  The problem did not exist in Beta3plus.

After the initial installation and as the guest is rebooting to begin the second part of the install an error message states, "No kernel was found.  The installation may have failed".  

Debug output from vm-install states:

DEBUG    Mounting a disk:  ['/bin/mount', '-o', 'loop,ro,offset=542868480', '/var/lib/xen/images/opensuse_103_rc1_pv_64/disk0', '/tmp/tmpTiuw6W']
DEBUG    Running: ['/bin/mount', '-o', 'loop,ro,offset=542868480', '/var/lib/xen/images/opensuse_103_rc1_pv_64/disk0', '/tmp/tmpTiuw6W']
DEBUG    Mount failed (mount: wrong fs type, bad option, bad superblock on /dev/loop1,
       missing codepage or helper program, or other error
       In some cases useful info is found in syslog - try
       dmesg | tail  or so

The problem indicates file corruption which is typically caused by the file system not shutting down cleanly at the end of the install.  This may be because some service is still running when the install tries to unmount the partition.  Then when xen tries to extract the kernel from the image it mounts the filesystem read only which prevents the journal from replaying and causes this error.