Xen 4.1.2 - Domains not starting

[Arrta]

I upgraded to 4.1.2 of xen and Gentoo kernel 3.2.1.
Xen works fine, manually.

When I told xenconsoled, xendomains and xenstored to start using rc-update is where the issues started.
Xenconsoled and xenstored start with no issues. Xendomains starts immediately after xenstored and eventually fails. the error I get is "failed to free memory for the domain".
After I login I can start a domain via command line without issue. So, I told xendomains not to run.

When starting without xendomains, I log in and run the first domain and also fail with "failed to free memory for the domain". A second run of the exact same command starts the domain that failed with the error.

The error message when searching on it and xen turns up messages about not having started the xenstored/xencommons script, which is obviously not the case. How would we go about resolving this?