I have the same problem with Ubuntu server 8.04.2 LTS on VirtualBox 2.1 (host 
Windows XP SP2, Intel Core 2 Duo T5500)
Though, Shot workaround (see 
https://bugs.launchpad.net/virtualbox/+bug/151942/comments/8) worked for me :-)

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PANIC: CPU too old for this kernel
https://bugs.launchpad.net/bugs/151942
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