You are indeed correct that specifying the format of the disk image file
corrected the issue.  However, this is also a fairly large regression
over previous functionality.  Configurations that worked flawlessly
under lucid will now break under maverick.  Additionally, the reason for
the breakage will not be clear.  There aren't any error messages
reported, at least none that I could find, that would guide the user to
what the problem actually is.

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AppArmor security driver does not support backingstore
https://bugs.launchpad.net/bugs/470636
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