I am getting the same problem, same software setup running on a Athlon
X2 4400. I don't think it is related to xen-tools themselves I believe
it is actually a kernel bug.

Running xen-create-image under the normal kernel linux-
image-2.6.22-14-server it will work perfectly. Running it under linux-
image-2.6.22-14-xen will get a kernel panic every time without fail.

It will also panic on an heavy disk i/o ie copying large files,
installing large packages, running multiple xen virtual machines at the
same time, swapping in and out to the disk.

-- 
create image  - kernel panic 
https://bugs.launchpad.net/bugs/161171
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