(For the eager ones, the simple
VBoxManage convertfromraw LiveDVD.iso Linux.vdi
will *not* work. It completes successfully with no errors, but it doesn't make the resulting VDI bootable.)
Why would you need such conversion? The case is: you downloaded or created a Linux Live CD/DVD. You want to play with it while preserving changes between restarts.
Of course, you can create very quickly simple VM and boot from the CD/DVD (or the ISO) and to preserve changes made, you could "save the VM state". But what if your host or guest crash? Then you would've lost all changes you made while running CD/DVD-based VM.
The procedure below is tested on the following config:
- Host: Windows 7 Home Premium 64 bit
- Guest: Ubuntu 9.04 LIve CD/DVD
- VirtualBox 4.1.10
1) create simple VirtualBox VM which boots from the Live CD/DVD and make sure you boot the OS successfully. Everyone can do that easily by just following all default prompts for creating new VM. When you start the VM for first time, point it to boot from your Linux Live CD/DVD (from host's physical DVD/CD reader, or from ISO file)
2) When you successfully boot into your virtual Linux, do the following:
- System -- Administration -- Install
- Standard Linux installation starts
- Follow default prompts or adjust settings as in any standard Linux installation
- (At "Prepare disk space" window, if you have created more than one hard disks for your VM, choose the one to install Linux to)
- Follow default prompts or adjust settings as in any standard Linux installation
- After successful installation, shutdown the VM
- in the VM's Settings -- System - change "boot order" to boot from the VM's hard drive where you installed your Linux
- start the VM and done - you have converted the Linux LIve CD/DVD to bootable VDI
You can, of course, achieve the above alliteratively by:
- opening the LIve CD/DVD ISO file and editing GRUB boot options to specify the disk to boot from, and probably some other changes
- converting the ISO file to VDI via the above mentioned command VBoxManage
But note that the first procedure doesn't require you to know any deep Linux OS boot config details

Hope it helps!