Now comes to OS installation part. Before you install the OS, Click on the virtual machine you just created and click on the settings button on top. It値l show you all the configurable settings. Under the general setting, you can resize the RAM settings and you can also adjust the video memory setting. I have 256MB video card, so I allocated 128 MB for video.

(general setting)
Click on CD/DVD-ROM on the left side. Once you are there, Check Mount CD/DVD drive and select your CD/DVD drive from the drop down box. My default CD drive is /dev/cdrom, so I selected that.

(CD drive)
The next step is Audio. Click on Audio on the left side. I知 not sure if this step is needed, but I did it anyway. It may work without doing this step. Check Enable Audio and select ALSA Audio Driver.

(Audio)
Click on the USB option. Check Enable USB Controller. Click on the tiny USB cable icon with small green dot on the right. It値l show you all available USB devices. Add those to the filter (picture below). This won稚 load the USB devices automatically when you boot the virtual OS, but it値l give you an option to load them when you want.

(USB)
Click OK. You are now ready to start the installation of virtual OS. Put the Windows XP installation CD in the CD drive. Select the virtual machine you created from the Virtualbox and click the Start icon on top. It値l start the installation of Windows. Windows installation will show you the virtual disk as the disk to install. Format it and install the OS. Once the installation is done and you login, you can select the USB devices you want to install from the menu. Select mount option from the VM menu and select the USB devices you want to mount.
Virtualbox starts the virtual OS in a small window. You can run it full screen by selecting full screen in the menu. Once you click on virtual OS, the control of your mouse, keyboard and USB devices go to the virtual OS. If you want to get the control back to your Ubuntu box, click the CTRL key on the right side of the keyboard. This will give the control back to the original OS.
I hope this helps you to setup your virtual machine. If you have any suggestion, please leave a comment. I felt Virtualbox is little slower compared to VMWare server and it also slowed my Ubuntu machine a little bit, but the real advantage are, Virtualbox is open source and it supports USB devices like webcam without paying money.