The dedicated servers at OVH come with their own custom kernel. The kernel is compiled without support for modules, so virtualization solutions like KVM / libvirt / Xen will show error messages and refuse to work.
The solution is easy. Install the standard Ubuntu Server kernel:
apt-get install linux-image-server
Then change the boot order so that the operating system does not load the OVH kernel by default any more:
mv /etc/grub.d/06_OVHkernel /etc/grub.d/25_OVHkernel
Run the update-grub command for the changes to become effective:
Restart the server to boot the new kernel:
shutdown -r now
If everything worked fine uname -r will show an output like 3.2.0-25-generic instead of 3.2.13-grsec-xxxx-grs-ipv6-64 and lsmod will show you a list of loaded modules instead of an error message.