I encountered many problems with Suse 10.0 and Xen 3. Some could be resolved. Some not
I installed Suse 10.0 with xen packets and did a online update for all packets. What i have at the end are these packages:
I configured grub as usual (there are many howto's for this), created a logical volume for the guest domain "Domain-1", created a filesystem, mounted it and made a "Installation in a directory" with yast. Then i copied the xen kernel modules in this directory and created a config for Domain-1. The start of the Domain-1 guest worked well at the first time.
Problems & Solutions
If you get errors like "2 respawning too fast" in the guest domain, then you just have to disable the tty's in /etc/inittab.
Networking in the guest domain does not work after reboot. During domain startup you can see that eth0 does not get hotplugged. ifconfig shows a ethX (X>0) but no eth0.
Solution: Suse tries to use persistent device names. So each time a new ethernet device is "plugged" you get a net ethX interface. The device is identified by the mac address. And xend creates random mac adresses by default. There is no advantage in random mac addresses so you should configure your domain to use one specific mac address. I usually let xen choos a random mac at first boot and then set this mac in the domain config file.
See /usr/share/doc/packages/sysconfig/README.Persistent_Interface_Names for mor info about persistent names. The file /etc/udev/rules.d/30-net_persistent_names.rules holds the mac addresses in case you want to manipulate the naming.