This problem still occurs in Fedora 13, with qemu-kvm-0.12.3
I checked:
yum install qemu-kvm
......
Setting up Install Process
Package 2:qemu-kvm-0.12.3-8.fc13.x86_64 already installed and latest version
Nothing to do

-- 
XP guest install fails with NTFS format error
https://bugs.launchpad.net/bugs/477946
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Status in QEMU: Fix Committed

Bug description:
Ubuntu 9.10 on AMD6400X2, 2G RAM, all updates applied as of date of bug report
Latest qemu-kvm installed (0.11)
XP guest  install (XP Pro SP2) fails when attempting to format the install 
partition (10G) as NTFS with the error "Setup was unable to format the 
partition. The disk may be damaged". 512M memory allocated to VM, one processor 
allocated. No additional qemu options specified.

However, can successfully format partition as FAT and complete install. 
However, after so doing, scheduled an NTFS convert on next reboot of guest. 
When the virtual machine was shut down and restarted, it immediately failed 
with a 'missing NTLDR' error. This occurred before the NTFS conversion took 
place.

Deleted all VMs and associated files and rebooted. Recreated the VM and retried 
the install. Failed on format exactly as before. Disk subsystem scanned, no 
errors found, no hardware problems have occurred previously, this is a highly 
stable testbed machine which has been in use for years.



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