The problem is that VDSM tries to update the upstart script every time it starts (vdsm/vdsmd.init.in):

464 start_libvirtd() {
[...]
434     if ! diff -q "$packaged" "$target" >/dev/null;
435     then
436         /bin/cp -p "$packaged" "$target" || return 1
437         /sbin/initctl reload-configuration
438     fi

We should add a check to verify that the file is present before proceeding to the copy.

A patch has been proposed upstream:

commit 41521ed9eb3cd5a3e40e675137d45d9d462e3cde
Author: Federico Simoncelli <fsimonce>
Date:   Tue Aug 21 08:36:50 2012 -0400

    Check if libvirtd.upstart is present before copying
    
    If the (libvirt) packaged upstart script is present in the rpm list
    of files but is absent from the filesystem the initscript was failing
    because the cp command couldn't copy it. This is mostly interesting
    in stripped down installations as the ovirt-node.
    
    Signed-off-by: Federico Simoncelli <fsimonce>
    Change-Id: I1ba7d52d21e2a072b99ffc9055327d217c78e8fc

http://gerrit.ovirt.org/7375

Agree that we should have a check for whether the original file exists or not, but why haven't we seen this problem before?  RHEV-H has always provided a version of libvirtd.conf in /etc/init directly and no version in /usr/share/doc (or wherever the original one is)

(In reply to comment #4)
> Agree that we should have a check for whether the original file exists or
> not, but why haven't we seen this problem before?  RHEV-H has always
> provided a version of libvirtd.conf in /etc/init directly and no version in
> /usr/share/doc (or wherever the original one is)

Do you modify in some way the /etc/init.d/vdsmd script?
For what I see in a rhevh host you have:

420 start() {
[...]
434     start_needed_srv
[...]

Instead of:

434     start_needed_srv && start_libvirtd

The issue was triggered by the fact that a newer version of vdsm was injected into rhevh (updating /etc/init.d/vdsmd). In any case you may want to generalize and propose upstream vdsm your changes instead of keeping them on just rhevh.

this happened since vdsm was injected into an installed machine, not into the .iso.

check in ovirt-node repository in $GIT_REPO/recipe/rhevh6-post.ks

These are the changes that I see

# semanage is not present in the image and virt_use_nfs is on (see rhbz#642209)
# remove it from vdsmd startup script to avoid error
sed -i 's#/usr/sbin/semanage#/bin/true#' /etc/rc.d/init.d/vdsmd

# libvirtd upstart job is already configured on rhevh
sed -i 's/ && start_libvirtd$//' /etc/rc.d/init.d/vdsmd

# chkconfig results (symlinks) cannnot be peristed
sed -i 's#/sbin/chkconfig \$srv off##' /etc/rc.d/init.d/vdsmd