As have been said in other threads, this is a known issue. Incognito used to work perfectly in VirtualBox -- I used it extensively to try out my development builds. A bit less than 1½ years ago something changed, and now I can't even get X to start in the old versions of Incognito which I know for a fact worked 2 years ago. To me it seems like a bug was introdiced in VirtualBox.
The problem is video related, and it seems it's only the "fbdev" driver that works. In 2009.0 beta, add 'debugmode' to the kernel commandline (press TAB when you have selected your preferred language), then when you are dropped to a console, login as root (the password is empty since you added debugmode), edit /etc/X11/xorg.conf and comment/remove line 4 (which says 'Screen 0 "ScreenVesa" 0 0') and make sure that the device section for 'Card0' uses 'Driver "fbdev"' (should be on line 179). Then restart xdm with '/etc/X11/xdm restart'.