@Alexandre Kraft  - My CPU doesn't support VT-x/AMD-V and I have turned
the VT-x/AMD-V option off and I still can't boot the newer kernel.  How
does this fit into your theory that this is indeed the problem?

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Kernel panic during boot in VirtualBox with kernel 2.6.26.3-generic
https://bugs.launchpad.net/bugs/246067
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