I haven't used it much with a KVM, but it did seem to work OK with one on the machine I setup for Ashton (WinMe, MEPIS, Ubuntu triple-boot).

I found Ubuntu easier for me (a noob) to update without breaking things than MEPIS, but I've still like MEPIS better out of the box.

FWIW.

I hope you get it straightened out without too much trouble.

Cheers,
Scott.