I recently installed Xen on a Debian Lenny amd64 box, and found that the Xen kernel would not boot, failing to mount the root filesystem:

No filesystem could mount root, tried:
Kernel panic - not syncing: VFS: Unable to mount root fs on unknown-block(0,0)

I noticed in /boot/grub/menu.lst that the standard Debian kernel included an initrd image, whereas the Xen kernel didn’t:

# This is the Xen kernel that fails to boot:
title           Xen 3.2-1-amd64 / Debian GNU/Linux, kernel 2.6.26-2-xen-amd64
root            (hd0,0)
kernel          /boot/xen-3.2-1-amd64.gz
module          /boot/vmlinuz-2.6.26-2-xen-amd64 root=/dev/sda1 ro console=tty0

# This is the standard kernel that does boot:
title           Debian GNU/Linux, kernel 2.6.26-2-amd64
root            (hd0,0)
kernel          /boot/vmlinuz-2.6.26-2-amd64 root=/dev/sda1 ro quiet
initrd          /boot/initrd.img-2.6.26-2-amd64

To get the Xen kernel working, I needed to create an initrd image, with:

dave@devvps:/boot$ sudo update-initramfs -c -k 2.6.26-2-xen-amd64
update-initramfs: Generating /boot/initrd.img-2.6.26-2-xen-amd64

Then update the Xen kernel’s entry in /boot/grub/menu.lst appropriately:

title           Xen 3.2-1-amd64 / Debian GNU/Linux, kernel 2.6.26-2-xen-amd64
root            (hd0,0)
kernel          /boot/xen-3.2-1-amd64.gz
module          /boot/vmlinuz-2.6.26-2-xen-amd64 root=/dev/sda1 ro console=tty0
module          /boot/initrd.img-2.6.26-2-xen-amd64

Upon rebooting, the Xen kernel boots succesfully, and Xen appears to be working:

dave@devvps:~$ sudo xm list
Name                                        ID   Mem VCPUs      State   Time(s)
Domain-0                                     0 24106     8     r-----     22.4

So, if you’ve installed a Xen kernel on Debian, remember to create an initrd image. I’m fairly surprised that this doesn’t happen automatically when the kernel is installed, actually.