See below. It's specifically the second volume group that collides between virtual and physical systems. Both dom0 and U have identical VolGroup00 VGs, but these do not collide.
Renaming the VG used by the domU within the domU removes the collision, but the newly-renamed VG still shows up in dom0 as a useable VG with space to be allocated.
Here is the pvdisplay output from dom0. Interestingly, it shows /dev/VolGroup01/lv-sys1-data as "physical volume" when it's obviously just an LV in the original VolGroup01 VG. And this only happens with the _second_ Volume Group created. VolGroup00 is not an issue on this or any other systems I've used:
[root@iain2 qemu]# pvdisplay
--- Physical volume ---
PV Name /dev/VolGroup01/lv-sys1-data
VG Name vg-sys1
PV Size 40.00 GB / not usable 4.00 MB
Allocatable yes (but full)
PE Size (KByte) 4096
Total PE 10239
Free PE 0
Allocated PE 10239
PV UUID FTA4QU-ydZ7-e2Yy-nBsi-t4st-3jj7-IAkQH8
--- Physical volume ---
PV Name /dev/sda3
VG Name VolGroup00
PV Size 39.06 GB / not usable 29.77 MB
Allocatable yes (but full)
PE Size (KByte) 32768
Total PE 1249
Free PE 0
Allocated PE 1249
PV UUID tTViks-3lBM-HGzV-mnN9-zRsT-fFT0-ZsJRse
--- Physical volume ---
PV Name /dev/sda2
VG Name VolGroup01
PV Size 240.31 GB / not usable 25.75 MB
Allocatable yes
PE Size (KByte) 32768
Total PE 7689
Free PE 5129
Allocated PE 2560
PV UUID ZE5Io3-WYIO-EfOQ-h03q-zGdF-Frpa-tm63fX
[root@iain2 qemu]# cat sys1.xml
<domain type='kvm'>
<name>sys1</name>
<uuid>37f34394-d380-d2c4-ac37-3263c16028ff</uuid>
<memory>524288</memory>
<currentMemory>524288</currentMemory>
<vcpu>1</vcpu>
<os>
<type arch='x86_64' machine='rhel5.4.0'>hvm</type>
<boot dev='hd'/>
</os>
<features>
<acpi/>
<apic/>
<pae/>
</features>
<clock offset='utc'/>
<on_poweroff>destroy</on_poweroff>
<on_reboot>restart</on_reboot>
<on_crash>restart</on_crash>
<devices>
<emulator>/usr/libexec/qemu-kvm</emulator>
<disk type='block' device='disk'>
<driver name='qemu' cache='none'/>
<source dev='/dev/VolGroup01/lv-sys1'/>
<target dev='vda' bus='virtio'/>
</disk>
<disk type='block' device='cdrom'>
<target dev='hdc' bus='ide'/>
<readonly/>
</disk>
<disk type='block' device='disk'>
<source dev='/dev/VolGroup01/lv-sys1-data'/>
<target dev='vdb' bus='virtio'/>
</disk>
<interface type='network'>
<mac address='54:52:00:3b:4a:f5'/>
<source network='default'/>
<model type='virtio'/>
</interface>
<serial type='pty'>
<source path='/dev/pts/3'/>
<target port='0'/>
</serial>
<console type='pty' tty='/dev/pts/3'>
<source path='/dev/pts/3'/>
<target port='0'/>
</console>
<input type='mouse' bus='ps2'/>
<graphics type='vnc' port='-1' autoport='yes' keymap='en-us'/>
</devices>
</domain>