In the line that reads:
"Ok, I've just checked the file permissions on the xml file in the machines folder, and when the VM was created VirtualBox assigned owner and group to user1, I changed the group to user2. I'm now going to login to user2's account to see if that did the trick..."
Where it says "...I changed the group to user2.", scratch that because thats NOT what I did. Sorry for any confusion this may have caused I was in a hurry to post my results and I ended up making a mistake. Sure would be nice if there was a way to edit posts after they've already been posted.
Detailed description:
So because the VM was not showing up in user1's account, I erased the xml file located in the /.VirtualBox/Machines folder. This allowed me to use the existing VDI file (A virtual hard disk located in /.VirtalBox/HardDisks) to create a new VM from the "NEW" button or "CTRL+N" in the main screen of VirtualBox. This essentially replaces the xml file located in /.VirtualBox/Machines with a new one. However VirtualBox will assign the owner and group of that xml file's permissions as the user that created the new xml file via the "NEW" button or "CTRL+N" command. So after the xml file is created it needs to have the "group" property of its permissions changed to "vboxusers" (using the the 'right+click' menu look under permissions tab of the files properties).
Short Description:
Delete the xml file in the /.VirtualBox/Machines directory
Create a new VM, and use an existing VDI file when you do it. (So you can restore the VM you got rid of when you deleted the XML).
Reset the permissions on the newly created XML file (located in /.VirtualBox/Machines/) leave the owner as is, and change the group to "vboxusers".
This concludes the correction to the previous post. Thank you for your time and patients.