Jamin, your vm.xml does not contain enough information-- you must
specify the disk format when defining a new VM. Simply put, if you are
using a qcow2 disk you must specify "<driver name='qemu' type='qcow2'/>"
in the vm.xml you are using.

-- 
libvirt no longer probes chained backing stores
https://bugs.launchpad.net/bugs/656173
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