GeForce 8600GTは、FrameBuffer使えないようです。
xm create実行時のログ。

domid: 1
qemu: the number of cpus is 1
shared page at pfn:1ffff, mfn: 70dd5
buffered io page at pfn:1fffd, mfn: 70dd7

       ---------------------- DirectFB v0.9.25 ---------------------
             (c) 2000-2002  convergence integrated media GmbH
             (c) 2002-2004  convergence GmbH

(*) DirectFB/Core: Single Application Core. (2006-12-04 07:38)
(*) Direct/Memcpy: Using SSE optimized memcpy()
(!) Direct/Util: opening '/dev/fb0' and '/dev/fb/0' failed
    --> No such file or directory
(!) DirectFB/FBDev: Error opening framebuffer device!
(!) DirectFB/FBDev: Use 'fbdev' option or set FRAMEBUFFER environment variable.
(!) DirectFB/Core: Could not initialize 'system' core!
    --> Initialization error!
Could not initialize SDL - exiting


# cat /proc/fb


# cat /etc/X11/xorg.conf
Section "Device"
    Identifier     "Videocard0"
    Driver         "nvidia"
    VendorName     "NVIDIA Corporation"
    BoardName      "GeForce 8600 GT"
    Option         "UseFBDev" "true"  <-追加


# cat /var/log/Xorg.0.log | grep FBDev
(WW) NVIDIA(0): Option "UseFBDev" is not used

Domain-U起動時の「Cannot allocate memory」エラー*1は、いつの間にか出なくなりました。*2