The sys-kernel/xen-sources-2.6.12.6-r2 package had a /usr/src/linux-2.6.12.6-r2-xen/arch/xen directory, containing a Makefile etc, needed to make "make ARCH=xen ..." work. Now, thw sys-kernel/xen-sources-2.6.16.18 package doesn't seem to have this /arch/xen directory anymore, so ARCH=xen no longer works. Now I can't find any documentation on how to build a XEN kernel without ARCH=xen, so I humbly assume that this is a bug? If not, perhaps the howto on http://gentoo-wiki.com/HOWTO_Xen_and_Gentoo could be updated to explicitly tell how to configure the kernel, since this is not very clear to me at the moment. Kind regards, Erik Logtenberg.
Nevermind, the solution is to select the: [*] Enable Xen compatible kernel option under "Processor type and features". This is indeed changed since the previous package. Since the HOWTO is a Wiki, I'll update that myself. Kind regards.