This bug has been copied from bug #789331 and has been proposed to be backported to 5.8 z-stream (EUS).
I'll need to make another build, for some reason this build was only built for x86_64, trying to figure out what's going on.
New build pushed with i686 packages this time
Verified on spice-client-0.8.1-6.el5_8.2 {i686,x86_64)
Since the problem described in this bug report should be resolved in a recent advisory, it has been closed with a resolution of ERRATA. For information on the advisory, and where to find the updated files, follow the link below. If the solution does not work for you, open a new bug report. http://rhn.redhat.com/errata/RHBA-2012-0147.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: The SPICE client did not correctly handle an exception which was raised when trying to connect to a guest operating system with no running SPICE agent. Consequently, the SPICE client application terminated unexpectedly after the 30-second timeout. With this update, the SPICE client correctly handles this situation and successfully connects to the guest system without unnecessary waiting.