Error: Bootloader isn't executable

I am trying to build a new appliance using SUSE studio, but keep running into a problem with my xen image. I have tried my own appliance and even a few others, all with the same result. When I do a xm create for new guest image I get
“Error: Bootloader isn’t executable”
I know this has to be a problem on my DomU but I don’t know what it could be.
I am running
xen 3.2.0_16718
SLES 10 SP2 x86_64

Anyone have an idea??