In this guide I will explain how to install and use KVM to create and run virtual machines on a Debian Squeeze Server.
In this tutorial I will show how to create image-based virtual machines.
KVM makes use of hardware virtualization. For that you need a CPU that supports hardware virtualization such as Intel VT or AMD-V.

Step 1. Check if your CPU supports hardware virtualization using the following command:

egrep ‘(vmx|svm)’ –color=always /proc/cpuinfo

If your result is nothing, then your processor doesn’t support hardware virtualization.

Step 2. Install KVM and virtinst :

apt-get install kvm qemu-kvm libvirt-bin virtinst

Step 3. Now we need to add the user as which we’re currently logged in to the groups libvirt and kvm. Run the following commands:

adduser `id -un` libvirt
adduser `id -un` kvm

Step 4. You also  need to set up a network bridge on our server.  You need that for virtual machines to can be accessed from outside.
For that you need to  install the package bridge-utils.

apt-get install bridge-utils

Step 5.  Configure the  bridge:

Edit the /etc/network/interfaces file:

vim /etc/network/interfaces

After edit your file should look something like this:

# The loopback network interface
auto lo
iface lo inet loopback

# The primary network interface
auto eth0
iface eth0 inet manual
# The brigde configuration
auto br0
iface br0 inet static
        address 192.168.4.100
        network 192.168.4.0
        netmask 255.255.255.0
        broadcast 192.168.4.255
        gateway 192.168.4.1
        bridge_ports eth0
        bridge_fd 9
        bridge_hello 2
        bridge_maxage 12
        bridge_stp off

Now restart the network interfaces:

/etc/init.d/networking restart

Step 6. Create the first virtual machine . In this example we will create a Debian Squeeze Guest using the command line:

In this example we will create the virtual machine named first-machine, with , 1024MB of RAM, 2 virtual CPU’s, and the disk image located in /var/lib/libvirt/images/first-machine.img, with a size of 5GB and using the image of the Debian Squeeze debian-6.0.2.1-i386-netinst.iso.

The command looks like this:

virt-install –connect qemu:///system -n first-machine -r 1024 –vcpus=2 –disk path=/var/lib/libvirt/images/firts-machine.img,size=5 -c /var/lib/libvirt/images/debian-6.0.2.1-i386-netinst.iso –vnc –noautoconsole –os-type linux –os-variant debiansqueeze –accelerate –network=bridge:br0 –hvm

And the output will look like this:

Starting install…
Allocating ’firts-machine.img’ |  5 GB     00:00
Creating domain…    |    0 B     00:00
Domain installation still in progress. You can reconnect to the console to complete the installation process.

Step 7. For connecting to guest machine you will need a means of connecting to the graphical console. For that you will use virt-manager.

Use the following command to install virt-manager:

apt-get install virt-manager

Step 8.  Connecting to the virtual machine. For that you need to have installed the graphic interface on your server.

You have 2 possibilities:
First is to acces directly the virt-manager application from Applications > System Tools > Virtual Machine Manager.
Second is acces the aplication from ssh using the command:

virt-manager

 

I also made a script that helps you to install and configure automaticaly KVM.

You can download it from  here : http://www.debian-tutorials.com/scripts/debian-kvm

NOTE: For the seccond possibility you need to configure your ssh server to forward the X server.
If you have questions feel free to ask them here.
Enjoy.