Be sure that the file you select is actually suitable for use as an image for Xen or KVM. A compressed tar file of a filesystem will not work, but a copy of the disk or primary partition from a real system should. Be aware that image files from stacklet.com are packaged inside a bzipped tar file, and so must be extracted first.
To create an image, first enter the path to the source file in the Image source field. Then enter an ID like centos-5.5 in the Unique ID field, and a human-readable description in the Description for image field.
When you click the Create button, Cloudmin will validate the image file and copy it from the specified source to all default storage locations. The image can then be used to create virtual systems.