I created a VM on a 3 gigabyte disk file. File> Restore Virtual Machine> Selected the disk file. virt-manager deletes it. Quality stuff.
The 'restore' menu options isn't for starting inactive domains, its actually for restoring guests that have previously been suspended (aka hibernated/saved). So it is not expecting a raw disk image, but instead a VM suspend image. That said it ought to have detected that you supplied a bogus image & refused to proceed, rather than deleting it.
It's amazing that it deleted it. Maybe the restore option could be more explicit too. I had powered off a VM and wanted to run it again. I presumed that was right.
This is now fixed with validation that the image we are trying to get xen to restore is in fact a valid Xen Paravirt image.