If your cloud is configured to use KVM instances (which is the default), instances will get virtio disks by default, that are named /dev/vda etc
Now when you install Xen in the VM and reboot, it does not have virtio drivers, because that is not implemented in Xen (sometimes things even crash) and that is why it fails to boot, because it cannot find its disk.

When one runs Xen in KVM outside of cloud, you can configure it to use IDE disks, e1000 NICs and no virtio for memory ballooning or serial consoles to make it work.

In a cloud, this is more tricky to get, but this could get you closer:
Code:
glance image-update \
--property hw_disk_bus=ide \
--property hw_cdrom_bus=ide \
--property hw_vif_model=e1000 \
$IMAGEID