Comment 10 for bug 1312199

[lpj]
Right, this is the reason why exporting it in /proc/cpuinfo is necessary. Normalizing the lpj= parameter is another approach, although I guess it would break existing users.

[ubuntu]
It seems to be using the wrong kernel. Did you do:
chmod 0644 /boot/vmlinuz*
Also which exact versions of:
linux-image (kernel)
libguestfs
seabios
febootstrap
are installed? You should open another bug in launchpad to track this issue separately.

[loop]
Loop mounts are insecure (as well as needing root). If you're seeing performance problems, take a look at:
http://libguestfs.org/guestfs-performance.1.html