Just in case this is able to help someone in some way...

I had this trouble to using 10.04 and VirtualBox 3.2.0 but I eventually
got it to work. (Note that using the CD in "Live" mode always works,
it's the installation that fails.)

I created a new VM using most of the defaults except that I created a
fixed size disk image and I set the network adapter to "bridged".

I tried the standard install and was given at the end of the install the
message as described in the bug report above.

I tried the suggestion as given in the "known bugs" by Canonical:

 ...restart your computer with the CD inserted, press any key at the
splash screen, and select “Try Ubuntu without installing”. Once the
desktop appears, use the “Install Ubuntu 10.04″ icon to begin installing
Ubuntu."

This didn't work.

I went into the VM Settings and made several changes:

 - Under "System" --> "Motherboard" I:
 - - changed "Enable IO APIC" from unchecked to checked,
 - - changed "Enable absolute pointing device" from checked to unchecked,
 - Under "Display" --> "Video" I changed "Video Memory" to read "32MB",
 - Under "Storage" I removed the SATA controller and attached the disk image as 
a Primary Master on the given IDE controller.

I then reinstalled 10.04 in the usual way, erasing the hard disk image,
and it completed without issue.

Since I made several changes at once I can't be sure which was the
necessary change, but I suspect that it was "Enable IO APIC".

-- 
[Wubi 10.04] The installer encountered an unrecoverable error and will now 
reboot
https://bugs.launchpad.net/bugs/575568
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