KVM image failed to start with virsh, permission denied
KVM images are restricted by selinux. Putting them in /var/lib/libvirt/images should suffice.
http://libvirt.org/drvqemu.html#securityselinux goes into more detail.
a easy solution would be to edit the /etc/libvirt/qemu.conf file and uncommenting the following lines:
User = "root"
group = "root"
Don't forget to restart libvirtd