As you use virt-manager, you dont need to poke around the .xml files, just go in the VM details and change the video adapter type to qxl and the display to spice (instead of vnc). Make sure you add a spice channel too - this is for seamless mouse integration, automatic resolution change and clipboard transfer.
You the need to install the spice guest tools for Windows that contains all relevant drivers and stuff:
- For automatic resolution change (that fits the guest the viewer window automatically) you need to use spicy (spice-gtk) because the built-in virt-manager viewer cannot do this with the current version.
- Also i found that USB redirection works fully only with the spice redirection (as opposed to the add hardware->host usb device which isnt working fully yet, for example cannot format USB drives).
- The qxl driver is signed, but my Win7 Pro 64 bit VM refused to load the driver - i had to mess around a bit and put Windows in developer mode. On the other hand i had a 32 bit Win7 Home VM that loaded it just fine (with the red warning box, but it worked).