Have you created your pool(s) in the KVM plugin?
I have a basic pool set up of iso files and kvm files
To do this go to the Pools tab
click Add, Name = iso files, Type = Directory, Path = /path/to/directory/where/iso/files/reside or use the browse button to select a directory, click Save. These iso files are the images u use as installation cd/dvd's. see Optical Drive in Add VM (new vm) or Devices - Add Optical (existing vm)
click Add, Name = kvm files, Type = Directory, Path = /path/to/directory/where/vm/image/files/are/saved or use the browse button to select a directory, click Save. This pool is where the vm images are saved to.
Now when u create a new vm (VMs tab - Add) your Storage Volume - Volume will list available images to attach to ur vm, or when selecting Volume - Create new disk u can select where to save ur disk/volume/image/qcow2 file to (select kvm files pool). And Optical Drive will list all ur images/iso files from the "iso files" pool.
Basic, simple and neat.