Cisco IOU License Generator. Originally found at http://www.routingloops.co.uk/cisco/gns3-v1-1-install-on-ubuntu-14-04-lts/, I have done a few changes to it. Make the file executable with " chmod +x CiscoKeyGen.py " and execute it " ./CiscoKeyGen.py ".

CiscoKeyGen.py

#! /usr/bin/python
print "\n*********************************************************************"
print "Cisco IOU License Generator - Kal 2011, python port of 2006 C version"
import os
import socket
import hashlib
import struct
# get the host id and host name to calculate the hostkey
hostid=os.popen("hostid").read().strip()
hostname = socket.gethostname()
ioukey=int(hostid,16)
for x in hostname:
 ioukey = ioukey + ord(x)
print "hostid=" + hostid +", hostname="+ hostname + ", ioukey=" + hex(ioukey)[2:]
# create the license using md5sum
iouPad1='\x4B\x58\x21\x81\x56\x7B\x0D\xF3\x21\x43\x9B\x7E\xAC\x1D\xE6\x8A'
iouPad2='\x80' + 39*'\0'
md5input=iouPad1 + iouPad2 + struct.pack('!L', ioukey) + iouPad1
iouLicense=hashlib.md5(md5input).hexdigest()[:16]
# add license info to $HOME/.iourc
print "\n*********************************************************************"
print "Create the license file $HOME/.iourc with this command:"
print " echo -e '[license]\\n" + hostname + " = " + iouLicense + ";'" + " | tee $HOME/.iourc "
print "\nThe command adds the following text to $HOME/.iourc:"
print "[license]\n" + hostname + " = " + iouLicense + ";"
# disable phone home feature
print "\n*********************************************************************"
print "Disable the phone home feature with this command:"
print " grep -q -F '127.0.0.1 xml.cisco.com' /etc/hosts || echo '127.0.0.1 xml.cisco.com' | sudo tee -a /etc/hosts"
print "\nThe command adds the following text to /etc/hosts:"
print "127.0.0.1 xml.cisco.com"
print "\n*********************************************************************"

To make this work do the following on the VM you are running IOU/IOL on.
I use nano - so be sure you have that installed with the following command:
apt-get install nano

Next Move to the directory you are running IOU from:
In EVE-NG it is this --> cd /opt/unetlab/addons/iol/bin

Create the python script:
nano key.py
<Paste the above script in to this file, if using putty just right click to paste.>
press Ctrl-O to save
press Ctrl-X to exit

now run the script:
python2 key.py

you will get some output.
now create your license file:
nano iourc
Paste the two lines in there for the license file, the first line is [license]
press Ctrl-O to save
press Ctrl-X to exit

You may also need to make the iourc file executable:
chmod +x iourc

now paste the line starting with grep in the console.

That should be it and the IOL should start now.

Many thanks for your help.

I'm curious:

Is VMware installation mandatory (even for users whose host/main OS is a Linux Distro)?
Can't we configure our Linux distro in such a way so that both GNS3 and iourc license it uses, work together?

@simonfbroad @biken00r @bluephoenix71 @DJDumlao @vargasjj