Does your user home folder name contains special characters or spaces?
Have you modified any of the VirtualBox .kmk files?
I have no idea why it fails and I think it's impossible for me to guess the cause. I recommend you to use
Process Monitor and build while this tool is running with applied filters, such as "operation is process start include" and looking at the process environment variables, or just monitoring for failed file access and odd file paths.
You could also insert
$(info text) lines in the right places, inside kmk files of interest, to look at how some variables get propagated through the build process. If I were you, I would be very interested to know what happens with these variables: KBUILD_TARGET, BUILD_TARGET, BUILD_HOST, BUILD_PLATFORM.
I also attach a patch, which I apply before start building VirtualBox, but don't see any reasons why it should fail in this manner and this early, by not having applied these small modifications. Most of them are for configure.vbs, but you already have passed that step and your AutoConfig.kmk file looks fine to me. I think it's pointless to apply it, in your case, for the current issue.