VirtualBox bug[?] when Chainloading Grub2

Question

Regarding this: How to install Fedora&Ubuntu with encrypted VG's on one disk?

So booted into Ubuntu..and I run this script:

#!/bin/bash

# show the bootlist of grub when booting pc
sed -i.backup 's/^GRUB_HIDDEN_TIMEOUT=/#GRUB_HIDDEN_TIMEOUT=/' /etc/default/grub
sed -i 's/^GRUB_TIMEOUT=10/GRUB_TIMEOUT=5/' /etc/default/grub
# update-grub # we will use this later too.. don't need it here

# add the "chainload grub" function
cp /etc/grub.d/40_custom /etc/grub.d/40_custom.backup
echo "#!/bin/sh
exec tail -n +3 \$0
menuentry 'FEDORA' {
    insmod chain
    set root=(hd0,3)
    chainloader +1
}" > /etc/grub.d/40_custom
chmod 755 /etc/grub.d/40_custom
update-grub

sync
sync
sync

ok, great no error messages..

I'm using: VirtualBox-3.2-3.2.12_68302_fedora14-1.i686

Now I want to reboot the virtualbox machine to test the whole thing..this is what I get a few seconds after i select "FEDORA" in the grub2 bootlist:

pichost #1 - pichost #2

great! .. :(
other things: VBox.log; 2011-04-17-15-23-37.048-VirtualBox-12365.log
Can anyone help me? Is there a workaround for this bug?

Thank you!