madsere-
Following Fedora's lead (F8) with CentOS 5.2 rsyslogd has become the default replacing sysklogd. As such you can comment out/change the following sections from /vz/template/centos/5/i386/config/install.post:
The following is no longer required as there is no separate klogd daemon in rsyslog:
# Disable klogd
#$VZCTL exec2 $VEID \
# "sed -i -e 's/daemon\\ klogd/passed\\ klogd\\ skipped/' \
# -e 's/killproc\\ klogd/passed\\ klogd\\ skipped/' \
# /etc/init.d/syslog"
# FIXME: fix '/etc/init.d/syslog status' to return 0
# even if klogd is not running
Change the /etc/syslog.conf to /etc/rsyslog.conf in the following area of the file:
# Disable fsync() in syslog
$VZCTL exec2 $VEID \
'sed -i -e s@\\\([[:space:]]\\\)\\\(/var/log/\\\)@\\\1-\\\2@' \
/etc/rsyslog.conf
Now your templates should build perfectly.