I would agree it's broken as I've also been unable to get guests to work
"out of the box". I've found the problem to be a missing kernel module in
the initrd, required for disk access (xenblk.ko). If I build an initrd
with xenblk.ko included, guests boot fine.
I just make an initrd this command:
mkinitrd --with=xenblk.ko /boot/your_image_name.img your_kernelname
Just use the kernel name from uname -a
mkinitrd --with=xenblk.ko /boot/initrd_test.img 2.6.19-prepcifs_fix