I solved the problem last week by installing Ubuntu 11.10 Demo on Beagleboard, installing linux-image-2.6.38-13-omap and changing the booting kernel as described in: http://elinux.org/BeagleBoardUbuntu#Demo_Image
I’m sorry, I would like to help, but at this moment I don’t have any BeagleBoard xM rev C availiable.
Can you give some details on the steps you took to install the linux-image-2.6.38-13-omap and changing the booting kernel? I have tried a few times but having trouble because I am a beginner.