Not entirely sure if this applies to FC5, but I had the same problem in RHES3.  You need to create a dir called 'initrd/ off root in your disk image vm2.img.  It can be an empty dir, but RH type installs require it. 
max
 
-----Original Message-----
 
Message: 1
 Date: Mon, 22 May 2006 22:59:07 -0400 (EDT)
 From: "Purav Saraiya" <purav@xxxxxxxxxxxxx>
 Subject: [Xen-users] Error starting DomU (Kernel panic - not syncing:
         No      init found)
 To: xen-users@xxxxxxxxxxxxxxxxxxx
 Message-ID:
         <64388.134.134.136.3.1148353147.squirrel@xxxxxxxxxxxxxxxxxxxxx>
 Content-Type: text/plain;charset=iso-8859-1
 
Hi,
 
I am not able to start a new domainU on FC5.
 To start the new domain I give command xm create -c domU.conf vmid=1.
 
This gives me the following error:
 
VFS: Mounted root (ext3 filesystem) readonly.
 Kernel panic - not syncing: No init found.  Try passing init= option to
 kernel.
 
Call Trace: <ffffffff80128d62>{panic+134} <ffffffff801083a6>{init+908}
        <ffffffff8010b7aa>{child_rip+8} <ffffffff8010801a>{init+0}
        <ffffffff8010b7a2>{child_rip+0}
 
The configuration that I am using:
 
The config file for domU - domU.conf contains:
 kernel = "/boot/vmlinuz-2.6.15-1.2054_FC5xenU"
 memory = 64
 name = "ExampleDomain"
 vif = [ '' ]
 disk = [ 'file:/srv/vm2.img,sda1,w' ]
 root = "/dev/sda1 ro"
 extra = "4"
 
I created the vm2.img file
 and copied /{bin, dev, etc, lib, root, sbin, usr, var} from the domain0.
 
In vm2.img, /etc/fstab file contains:
 
/dev/sda1                /           ext3    defaults        1 1
 #/dev/VolGroup00/LogVol00 /          ext3    defaults        1 1
 LABEL=/boot             /boot        ext3    defaults        1 2
 devpts                  /dev/pts     devpts  gid=5,mode=620  0 0
 tmpfs                   /dev/shm     tmpfs   defaults        0 0
 proc                    /proc        proc    defaults        0 0
 sysfs                   /sys         sysfs   defaults        0 0
 #/dev/VolGroup00/LogVol01 swap       swap    defaults        0 0
 
In dom0, /boot contains:
 config-2.6.15-1.2054_FC5          System.map-2.6.15-1.2054_FC5
 config-2.6.15-1.2054_FC5xenU      System.map-2.6.15-1.2054_FC5xenU
 vmlinuz-2.6.15-1.2054_FC5         initrd-2.6.15-1.2054_FC5.img     
 vmlinuz-2.6.15-1.2054_FC5xenU     initrd-2.6.15-1.2054_FC5xenU.img 
 xen.gz-2.6.15-1.2054_FC5          xen-syms-2.6.15-1.2054_FC5
 
It would be great if you could point out where am I making mistakes.
 
Thanks,
 Purav
 
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