Your knowledge far exceeds mine in knowing the tools to use to find the bottleneck and i am hoping here too, how to read the output of vmstat 1? After looking here to interpret the output:
https://www.thomas-krenn.com/en/wiki...s_using_vmstat

Seems to be a whole lotta swapping going on?

Code:
procs -----------memory---------- ---swap-- -----io---- -system-- ------cpu-----
 r  b   swpd   free   buff  cache   si   so    bi    bo   in   cs us sy id wa st
 1  0  69568  36024     12 5275148    0    0   605   247   19   15  2  1 89  8  0
 0  0  69568  33248     12 5277308    0    0  2048  3756 9727 6364  3  2 94  1  1
 0  0  69568  33776     12 5276992    0    0  4096     0 12421 8200  2  1 96  0  0
 0  0  69568  33248     12 5277128    0    0     0     0 12375 7601  1  2 96  0  0
 0  0  69568  35264     12 5275176    0    0  2048   496 8858 5668  2  1 96  0  0
 0  0  69568  33520     12 5277108    0    0  2048     0 7815 4995  2  1 97  0  0
 1  0  69568  33680     12 5277120    0    0     0   564 12163 7613  2  1 96  0  0
 0  0  69568  35364     12 5275232    0    0  2048     0 8938 5779  2  1 96  0  0
 0  0  69568  35568     12 5275120    0    0    32     0 11165 7067  2  1 96  0  0
 1  0  69568  35304     12 5275312    0    0  4064     0 11428 7212  1  1 96  1  1
 0  0  69568  31176     12 5279108    0    0  4096     0 10352 6522  2  2 96  0  0
 2  0  69568  35048     12 5275196    0    0     0   860 11276 7460  3  1 96  0  0
 0  0  69568  33912     12 5277228    0    0  2048     0 11314 7665  1  1 98  0  0
 0  0  69568  33984     12 5277196    0    0   140  8136 10859 7342  2  2 92  5  0
 0  0  69568  33832     12 5277192    0    0     0     0 15453 11446  4  2 93  0  1
 0  0  69568  31888     12 5279252    0    0  1908     0 12559 7889  1  1 97  1  0
 0  0  69568  36364     12 5273840    0    0  1880   544 11170 6972  1  1 94  4  0
 0  0  69568  32228     12 5277988    0    0  4256     0 12076 7457  1  1 98  0  0
 0  0  69568  30248     12 5280056    0    0  2048     0 10443 6423  0  1 98  0  0
 0  0  69568  30248     12 5280060    0    0    32     0 9347 5848  1  1 98  0  0
 0  1  69568  35212     12 5273668    0    0  4704     0 10905 7029  1  1 96  2  0
procs -----------memory---------- ---swap-- -----io---- -system-- ------cpu-----
 r  b   swpd   free   buff  cache   si   so    bi    bo   in   cs us sy id wa st
 2  0  69560  35768     12 5273820    0    0    80   488 12882 8007  0  1 97  1  0
 0  0  69560  31752     12 5277860    0    0  4096     0 11485 6982  1  1 97  1  0
 1  0  69560  31800     12 5277900    0    0     0     0 14506 8909  1  1 97  0  0
 0  0  69560  38400     12 5271000    0    0  2188     8 10443 6672  2  1 96  0  0
 1  1  69560  34500     12 5272536    0    0  1788     0 9969 6969  6  2 90  2  0
 0  1  69560  33372     12 5266800    0    0 21168   160 12942 8493  7  2 77 13  0
 1  0  69560  38816     12 5261724    0    0  5632     0 8764 6308  9  1 83  6  0
 0  0  69560  34832     12 5265868    0    0  4064     0 13449 9003  4  2 94  0  0
 1  0  69560  34800     12 5265868    0    0    32   296 18274 12935  4  2 93  0  1
 0  0  69560  32384     12 5268032    0    0  2048   336 13609 9179  2  2 96  0  1
 0  0  69560  32480     12 5268084    0    0     0 15152 16132 10623  1  2 96  0  1
 1  0  69560  37416     12 5262936    0    0  4064    68 9962 6314  1  1 92  6  0
 0  0  69560  37224     12 5263056    0    0    84    68 10148 6466  1  1 97  1  0
 1  0  69560  33000     12 5267068    0    0  4012     0 12332 7714  1  1 97  0  1
 1  0  69560  36768     12 5263184    0    0   220     0 9300 6322  6  1 91  1  0
 2  0  69560  32784     12 5267288    0    0  4096   280 11401 7551  3  2 95  0  0
 0  0  69560  36616     12 5262044    0    0    84     0 11856 7624  5  2 92  0  0
 0  0  69560  32696     12 5266200    0    0  4012     0 10369 6651  1  1 98  0  0
 0  0  69560  32736     12 5266124    0    0     0     0 10167 6567  1  1 97  0  1
 1  0  69560  30944     12 5268164    0    0  2048     0 12373 7664  1  1 98  0  1
 0  0  69560  36024     12 5262964    0    0  4096   140 10867 6760  1  2 97  1  0
As for the resource setup, forgive me for not posting that bit of helpful info. It seems i was in a panic when the system would not boot. Here it is:
16GB RAM total with 4GB set aside for each of the 2 VM's. The rest, 8GB should be left over
2 SAS drives (local) with a PERC 6 controller. 1x300GB and 1x750GB in a non-RAID setup (i didn't configure the server). Opt directory is mounted on the 750GB drive
2 quad core Xeon's. Dom0 has 8 vCPU's and both of the VM's have 6 vCPU's a piece

While, for now, i am OK with the system booting on a different kernel, i would like to get back to the latest kernel (like it was before).