So after a fresh install, initially the issue was still present but then
when i followed https://wiki.ubuntu.com/SergeHallyn_libvirtnest and then
after a reboot i am able to create vms using Virtual Machine Manager.

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https://bugs.launchpad.net/bugs/1057024

Title:
  internal error Process exited while reading console log output: char
  device redirected to /dev/pts/1 error when creating a vm

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