Ubuntu alpha 2 has been released. The kernel pae error will popup when you try to install Ubuntu 12.04 alpha 2 in recent virtual box version 4.1.8. Since it is alpha version most of us want to install it in virtualbox for testing purpose. This problem arises because PAE is not enable by default in Virtualbox which is needed for Ubuntu 12.04 alpha 2. This process can be solved simply by enabling PAE in virtualbox.
Go to setting->process -> Enable PAE/NX as refer to below screenshot. After enabling PAE you don’t get any kernel error in virtualbox.
Note: If you are using older version of virtualbox this option can be found on click Settings->General->Advanced and there is a checkbox for PAE.