I have now been testing the KVM implementation for a couple of days and find that it works extremely well compared with SLES12 and is having no effect upon the server performance (AMD 8 core) running the kvm package. Very pleased with the result, only problem is that I still cannot get the mouse to work in the Display VNC configuration, but have found a strategy to combat this.

When you import a vm from an earlier version, the import routine sets up the video as QXL and Display as Spice. ALso, it looks like the network has problems. The procedure is as follows:
Boot the vm, and it will default to text mode (does not like the graphics setting). Run the text version of YAST and reconfigure the vm network card (no problems here). Also make sure that you have VNC set up in YAST as well. Make sure that you can ping the vm. Shut the vm down now and make changes to the display to VNC and the Video to Cirrus if you want to try to get the mouse to work, otherwise make no changes to the video and display. Reboot the vm, and it will come up again under text mode as before. However, if you VNC in from another computer, you will then have the graphical interface you require, with everything working as expected.

Just need backup exec to get sorted now.