Comment 11 for bug 1246121

Poked at this a little bit more, after some googling:

$ virsh net-list --all
 Name State Autostart Persistent
----------------------------------------------------------
 default inactive no yes

$ virsh net-start default
Network default started

$ uvt new precise i386 clean
Creating '/home/robru/.machines' directory...
Creating 'clean-precise-i386' VM with:
Memory: 1024
Image size: 8GB
Release: precise - 12.04
Release ISO file: ubuntu-12.04.3-desktop-i386.iso
Pristine snapshot: True
Confirm? [N]|y: y
Creating preseeded iso...
Preseeded iso file successfully created: vmtools-clean-precise-i386-ubuntu-12.04.3-desktop-i386.iso
Problem creating virtual machine 'clean-precise-i386' (doesn't exist). Aborting.

$ virsh net-list --all
 Name State Autostart Persistent
----------------------------------------------------------
 default active no yes

$ ifconfig
[snip]
virbr0 Link encap:Ethernet HWaddr 00:00:00:00:00:00
          inet addr:192.168.122.1 Bcast:192.168.122.255 Mask:255.255.255.0
          UP BROADCAST MULTICAST MTU:1500 Metric:1
          RX packets:0 errors:0 dropped:0 overruns:0 frame:0
          TX packets:0 errors:0 dropped:0 overruns:0 carrier:0
          collisions:0 txqueuelen:0
          RX bytes:0 (0.0 B) TX bytes:0 (0.0 B)
[snip]

$ virt-install --quiet --connect=qemu:///system --name=clean-precise-i386 --arch=i386 --ram=1024 --disk=path=/home/robru/.machines/clean-precise-i386.qcow2,size=8,format=qcow2,sparse=true,bus=virtio --virt-type=kvm --accelerate --hvm --cdrom=/home/robru/ISOs/cache/vmtools-clean-precise-i386-ubuntu-12.04.3-desktop-i386.iso --os-type=linux --os-variant=generic26 --graphics=vnc --network=network=default,model=virtio --video=cirrus --noreboot
ERROR internal error: process exited while connecting to monitor: W: kvm binary is deprecated, please use qemu-system-x86_64 instead
char device redirected to /dev/pts/2 (label charserial0)
qemu-system-x86_64: -drive file=/home/robru/.machines/clean-precise-i386.qcow2,if=none,id=drive-virtio-disk0,format=qcow2: could not open disk image /home/robru/.machines/clean-precise-i386.qcow2: Permission denied

Domain installation does not appear to have been successful.
If it was, you can restart your domain by running:
  virsh --connect qemu:///system start clean-precise-i386
otherwise, please restart your installation.

$ virsh --connect qemu:///system start clean-precise-i386
error: failed to get domain 'clean-precise-i386'
error: Domain not found: no domain with matching name 'clean-precise-i386'

$ ls -l ~/.machines/
total 136
-rw-r--r-- 1 root root 131072 Oct 30 00:03 clean-precise-i386.qcow2

$ sudo chown robru:robru ~/.machines/clean-precise-i386.qcow2

$ virt-install --quiet --connect=qemu:///system --name=clean-precise-i386 --arch=i386 --ram=1024 --disk=path=/home/robru/.machines/clean-precise-i386.qcow2,size=8,format=qcow2,sparse=true,bus=virtio --virt-type=kvm --accelerate --hvm --cdrom=/home/robru/ISOs/cache/vmtools-clean-precise-i386-ubuntu-12.04.3-desktop-i386.iso --os-type=linux --os-variant=generic26 --graphics=vnc --network=network=default,model=virtio --video=cirrus --noreboot
ERROR internal error: process exited while connecting to monitor: W: kvm binary is deprecated, please use qemu-system-x86_64 instead
char device redirected to /dev/pts/2 (label charserial0)
qemu-system-x86_64: -drive file=/home/robru/.machines/clean-precise-i386.qcow2,if=none,id=drive-virtio-disk0,format=qcow2: could not open disk image /home/robru/.machines/clean-precise-i386.qcow2: Permission denied

Domain installation does not appear to have been successful.
If it was, you can restart your domain by running:
  virsh --connect qemu:///system start clean-precise-i386
otherwise, please restart your installation.

So, permission denied despite correcting the permissions, and this network config seems quite broken.