This kernel does indeed work fine as well - thanks!

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https://bugs.launchpad.net/bugs/1278531

Title:
  nested kvm fails with trusty and upstream kernels

Status in “linux” package in Ubuntu:
  Confirmed

Bug description:
  First: the 3.2 precise kernel handled nested qemu very well.  As of
  saucy it has declined.

  In a host with saucy kernel (even on precise userspace), attempts to
  do nested kvm result in a hung kvm (inside the guest - host proceeds
  ok) taking 100%cpu.

  In a host with trusty kernel (even on precise userspace), nested kvm
  fails get past grub.  I have two screenshots, one resulting from
  attempting to boot from a precise mini-iso, another from attempting to
  boot a cloud image at:  http://cloud-images.ubuntu.com/quantal/current
  /quantal-server-cloudimg-amd64-disk1.img.  (If you convert that image
  to raw, it fails the same way).

  On the host, I see the following in /var/log/kern.log: kvm: zapping
  shadow pages for mmio generation wraparound

  I've reproduced this both on (a) a intel based vostro laptop - with
  separate installs of precise and saucy (with ubuntu precise, saucy,
  trust, upstream kernels), (b) an intel based server with precise
  userspace and saucy and trusty kernels;  and (c) an intel laptop
  running full uptodate trusty.

  As nested qemu worked will in the previous LTS, I think it is
  important to have it working in 14.04 LTS.

  ============= Original description ================
  I have a precise host with saucy ubuntu kernel installed.  I installed two 
VMs there, a saucy and a trusty guest.

  In the saucy guest, non-accelerated qemu works fine, but accelerated
  kvm hangs the first-level saucy guest completely, and pins it at 200%
  cpu usage:

     qemu-system-x86 --enable-kvm -monitor stdio -vnc :1

  On the trusty guest it works just fine.

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