I can confirm the same problem on a thinkpad X31 and an acer aspire one 
netbook. Without reading this ticket first i removed the xorg.conf file which i 
thought was the problem .This  didnt help. 
Once i managed to login and killed X so i could investigate. What i saw is that 
non of the video drivers are installed. xserver-xorg-video-all i think is the 
name of the package and is a dependency of xorg which we have in our 
packageslists so it should be there.

So now i try with those packages added and if this fails too i will
remove virtualbox. Ok it seems that there is no more loop but no
automatic x starts and no mouse.

Now i try without  the virtualbox-ose-guest-x11 and booting from usb on
the aspire works with mouse too. t seems that virtualbox-ose-guest-x11
is removing some essential X drivers? who knows


In any case I vote for removing both virtualbox-ose-guest-x11  and the 
xorg.conf entry :) 

The former is proven to cause problems the latter is better left alone, not to 
mess with xorg.conf and let X autoconfigure itself.
what we are trying to do with this xorg.conf is not blanking the screen, right? 
 this  :  (sleep 1;xset s off  -dpms &)& does it without messing with 
xorg.conf. it just have to go, normally in .xsession but recently this file is 
not  used anymore by gdm so it will have to be somewhere else. Maybe in 
/etc/X11/xsession.d? But still i dont think by default the screen should not 
blank out, it is just handy to be able to do it for a performance or something 
like this.

I have it in my .xinitrc (which is read when you use startx) but to be
honest is commented out because most of the time i would like my laptop
to blank out and save power, the whales and the polar bears.

-- 
xorg.conf and virtualbox-ose-guest-x11 conflict
https://bugs.launchpad.net/bugs/490067
You received this bug notification because you are a member of puredyne
team, which is the registrant for Puredyne Live.

Status in Puredyne liveCD/DVD/USB/HD: Confirmed

Bug description:
Seems like the barebones /etc/X11/xorg.conf which I added, and 
virtualbox-ose-guest-x11, may conflict. Having them both causes a x11+gdm crash 
loop when booting a live-USB on my Eee 701, the last message showing being 
"VirtualBox Additions disabled, not in a Virtual Machine".

IIRC, it was the xorg.conf which caused problems in aymeric's virtualbox and 
led to the addition of virtualbox-ose-guest-x11 in the first place. So maybe 
it's just a rubbish xorg.conf :(



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