With the upgrade to Fedora 15 some issues came up with that environment. I had deleted my old VMs and wanted to create two new template VMs (ones I can keep and clone for when I need an actual working VM). So I downloaded the ISOs from my MSDN account and started the process of creating the VMs.
Only thing is, I was stopped in my tracks. After setting up the VM (32-bit, 1 CPU, 1024M RAM, 50G storage) I got the error:
Unable to create cgroup for Windows2k8Server: No such file or directory
and the whole VM creation stops right there. So filed a Bugzilla against Virtual Machine Manager to get it fixed. In talking with the lead developer I found that problem is not with Virtual Machine Manager but with systemd itself.
To work around this if you're hitting the problem, and until it can be fixed in systemd (Bugzilla), you need to just stop and then start the libvirtd process and then create your VM. After I did that it worked as expected.