I'm trying to load from a DVD. The disc will run as LiveCD directly on the machine and has been used to install on another machine so seems OK. I've also tried the 2012.08 CD (known good) with the same result.
The computer has 4 Gig memory installed and I'm allocating 1024 to the VM. Our download page suggests memory requirement: 512 MB minimum, 1 GB recommended.
I have both IOAPIC and PAE/NX ticked. I'll try unticking PAE/NX and report back.
You probably have the Extension Pack installed but no harm in checking that it's installed and/or that it's the 4.2.6 pack (File > Preferences > Extension)
Mebbe try using the pclinuxos-kde-2012.12.iso
instead of a physical dvd
I hope I'm not teaching to suck eggs
but here goes....
In Settings > Storage >
go to the right of where it says IDE Primary Master
click on the image of the CD and drill down to where the iso is stored.
Under Storage Tree
I if you don't already have an Controller IDE
being shown, select the left hand + sign and the following image will appear - selectChoose Disk
and again drill to the ISO image