1. Are you running virt-manager on a remote node? What exact, full connection 
url is it using?
          No I am running on a local machine, host and the guest are on the 
same machine.    Connection url:    qemu:///system 

2. How far into the creation of the VM did it get?
3. What exact options did you use for creating the VM?

     Host is a fresh quantal install (beta2 amd64 desktop) - also occurs in p2q 
upgraded one)
     a. New VM -> Enter the name with 'Local install media' to install the os
     b. Select 'Use ISO image' and Browse and select a quantal amd64 image. (OS 
type: Linux and Version: Ubuntu 12.10 (Quantal     Quetzal))
    c. Choose 1024MB RAM
    d. Slect 'Create a disk image on the computer's hard drive' with 8GB
    e. Click Finish and then the error occurs at this point

4. If you 'sudo stop libvirt-bin; sudo start libvirt-bin' does VM creation 
succeed after that?
    No it does not solve, occurs even after stop/ start. Rebooting does not 
solve either

** Changed in: libvirt (Ubuntu)
       Status: Incomplete => Confirmed

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https://bugs.launchpad.net/bugs/1057024

Title:
  internal error Process exited while reading console log output: char
  device redirected to /dev/pts/1 error when creating a vm

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