Tested with KVM-74
If you set boot priority to "-nc" (network, disk) If you have a pxelinux.cfg file that sets the host to localboot the VM ends the PXE boot correctly and then says it is "Booting local disk", but fails right through (no delay, moves on) and then tries to PXE again starting a infinite loop of this.
Here is an example pxelinux.cfg file that shows this issue:
default linux
label linux
localboot 0