Can not boot CentOS VM using VirtIO in KVM

The problem here is that the virtual machine can't seem to see its own hard drive.

No volume groups found

You should do only one change at a time, so that if something breaks, you know what it is. Instead, you tried to change two things at the same time, so you can't be sure if it was changing the disk format or trying to get the installed system converted to virtio.

Start over from the beginning (with the original qcow2 image) and change only one thing at a time so that you can be sure of what's going wrong.

Also note that CentOS 5.8 can be installed directly to a virtio disk. You may find it easier to install a new virtual machine and transfer your data from one virtual disk to the other, or better yet use the installation DVD to update your existing virtual machine.