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libvirrt error: Connection reset by peer

I'm using a two node setup with Ubuntu 12.04, one cloud controller and one compute node. I'm using kvm and whenever I try to start an instance the compute node throws a libvirrt error:

2012-05-24 08:47:30 TRACE nova.compute.manager [instance: b0d33c8a-9bf6-4e39-b26c-5f9b382f2766] Traceback (most recent call last): 2012-05-24 08:47:30 TRACE nova.compute.manager [instance: b0d33c8a-9bf6-4e39-b26c-5f9b382f2766] File "/usr/lib/python2.7/dist-packages/nova/compute/manager.py", line 592, in _spawn 2012-05-24 08:47:30 TRACE nova.compute.manager [instance: b0d33c8a-9bf6-4e39-b26c-5f9b382f2766] self._legacy_nw_info(network_info), block_device_info) 2012-05-24 08:47:30 TRACE nova.compute.manager [instance: b0d33c8a-9bf6-4e39-b26c-5f9b382f2766] File "/usr/lib/python2.7/dist-packages/nova/exception.py", line 114, in wrapped 2012-05-24 08:47:30 TRACE nova.compute.manager [instance: b0d33c8a-9bf6-4e39-b26c-5f9b382f2766] return f(args, *kw) 2012-05-24 08:47:30 TRACE nova.compute.manager [instance: b0d33c8a-9bf6-4e39-b26c-5f9b382f2766] File "/usr/lib/python2.7/dist-packages/nova/virt/libvirt/connection.py", line 922, in spawn 2012-05-24 08:47:30 TRACE nova.compute.manager [instance: b0d33c8a-9bf6-4e39-b26c-5f9b382f2766] self._create_new_domain(xml) 2012-05-24 08:47:30 TRACE nova.compute.manager [instance: b0d33c8a-9bf6-4e39-b26c-5f9b382f2766] File "/usr/lib/python2.7/dist-packages/nova/virt/libvirt/connection.py", line 1575, in _create_new_domain 2012-05-24 08:47:30 TRACE nova.compute.manager [instance: b0d33c8a-9bf6-4e39-b26c-5f9b382f2766] domain.createWithFlags(launch_flags) 2012-05-24 08:47:30 TRACE nova.compute.manager [instance: b0d33c8a-9bf6-4e39-b26c-5f9b382f2766] File "/usr/lib/python2.7/dist-packages/libvirt.py", line 581, in createWithFlags 2012-05-24 08:47:30 TRACE nova.compute.manager [instance: b0d33c8a-9bf6-4e39-b26c-5f9b382f2766] if ret == -1: raise libvirtError ('virDomainCreateWithFlags() failed', dom=self) 2012-05-24 08:47:30 TRACE nova.compute.manager [instance: b0d33c8a-9bf6-4e39-b26c-5f9b382f2766] libvirtError: Unable to read from monitor: Connection reset by peer

I checked the bios, I checked "lsmod | grep kvm" and "lsmod | grep nbd". KVM is enabled in the bios and the modules are loaded.

When I try using "virsh start domain-name", I see the same error: "error: Unable to read from monitor: Connection reset by peer" . Any hints on what's wrong here?