At first I was experiencing the same error. Then i decided to try it
with amd-v enabled. Turns out my bios didn't support it, so I flashed it
with a new version, turned on amd-v and have successfully installed
ubuntu 8.10 in virtual box.

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Kernel panic during boot in VirtualBox with kernel 2.6.26.3-generic
https://bugs.launchpad.net/bugs/246067
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