This bug has been copied from bug #579497 and has been proposed to be backported to 5.5 z-stream (EUS).
Fixed in selinux-policy-2.4.6-279.el5_5.1.noarch.
An advisory has been issued which should help the problem described in this bug report. This report is therefore being closed with a resolution of ERRATA. For more information on therefore solution and/or where to find the updated files, please follow the link below. You may reopen this bug report if the solution does not work for you. http://rhn.redhat.com/errata/RHBA-2010-0561.html
Technical note added. If any revisions are required, please edit the "Technical Notes" field accordingly. All revisions will be proofread by the Engineering Content Services team. New Contents: After upgrading to Red Hat Enterprise Linux 5.5, the Xen hypervisor was unable to auto-start domains linked to in the /etc/xen/auto/ directory. This was caused by the default Red Hat Enterprise Linux 5.5 SELinux policy preventing the xm daemon from reading the symlinks in the /etc/xen/auto directory, with the result that the xm daemon could not start the virtual guests. These updated selinux-policy packages contain an updated SELinux policy that allows the xm daemon to correctly read the symbolic links in /etc/xen/auto. The xm service is now able to auto-start virtual guests upon system startup.