Ok,  I think I see the problem in parted.  I assume that vmbuilder uses
the output of parted's print free command to decide where to start the
new partition, and that shows the free space starts at 16.4kb.
Specifying that as the start position for the new partition would result
in the too small embed area issue.

Since parted prefers to start the first partition at 1 mb, it should
probably report the free space as starting there as well, not at 16.4kb.

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https://bugs.launchpad.net/bugs/556167

Title:
  vmbuilder uses parted to create disk images, which leads to broken
  sector counts (cannot use grub2 on disk images created by
  vmbuilder/parted)

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