Introduction:
Lately after I upgraded many packages in a Xen 4.4 DOMU VM the pygrub could not boot the VM any more.
During the security update, the installed grub2(grup-pc), which never created any problems before with pygrub, got updated and suddenly it did create problems to boot the VM. Here is the error message I got when trying to boot it:
Parsing config from /etc/xen/VM.cfg
libxl: error: libxl_bootloader.c:628:bootloader_finished: bootloader failed - consult logfile /var/log/xen/bootloader.32.log
libxl: error: libxl_exec.c:118:libxl_report_child_exitstatus: bootloader [-1] exited with error status 1
libxl: error: libxl_create.c:1024:domcreate_rebuild_done: cannot (re-)build domain: -3
libxl: error: libxl_dom.c:35:libxl__domain_type: unable to get domain type for domid=32
Unable to attach console
libxl: error: libxl_exec.c:118:libxl_report_child_exitstatus: console child [0] exited with error status 1

I have another VM whith the same Debian system in it which boots well. After comparing the grub.conf etc. with each other I could not see any differences.
If I launched the pygrub with the image disk of the VM as argument, I am normally presented with the Grub menu and then kicks out with the normal errors. This time I got no menu at all and got the following error message:
/usr/lib/xen-4.4/bin/pygrub /virtual/xen/VM/disk.img
Traceback (most recent call last):
File "/usr/lib/xen-4.4/bin/pygrub", line 839, in
raise RuntimeError, "Unable to find partition containing kernel"
RuntimeError: Unable to find partition containing kernel

After Googeling a bit I found this site which talks about this problem as well although with an LVM volume instead of with a file disk image. But the principle was the same:
https://bugs.debian.org/cgi-bin/bugreport.cgi?bug=745419
So in resume: If pygrub sees somethings else than zeroes in the first 512 bytes of the image disk, it returns with this error: ‘Unable to find partition containing kernel’

Cause:
During the upgrade of grub-pc the package script asked me to specify the boot sector where grub should be installed and I happen to select the proposed one ‘/dev/xvda2’ which was a mistake.

Preventive solution:
I should have left the image partition untouched and continue the upgrade of Grub-PC without grub being written in the boot sector, and then afterwards run the command:
update-grub

Present Solution:
Overwrite the boot sector(512 bytes) of the image file with zeros.

Command:
dd conv=notrunc if=/dev/zero of=/virtual/xen/domains/VM/disk.img bs=512 count=1
Note: I use the option conv=notrunc to make sure the output file will not be truncated to 512 bytes after the overwriting.

Result:
I could then boot the VM well again.