I use Oracle VirtualBox 3.2.12 on a Windows 7 Pro host. I installed Knoppix 6.2.1 on a 2 GB CF card using the flash install utility. I do the following in order to boot Knoppix 6.2.1 from that CF card into a virtual machine.

My first step is to connect a Knoppix 6.2.1 CD iso image to the virtual machine. There is virtual hard disk connected to the virtual machine with a 2 GB swap partition.

I insert the CF card into the USB card reader so that Windows recongnises it. Then I boot the virtual machine. As soon as the splash screen appears I quickly press a key in order to stop the bootloader's timeout. I connect my USB card reader to the virtual machine. Windows does not see the card reader anymore. I enter the line
Code:
knoppix fromhd=/dev/sdb1
at the splash screen's boot prompt. Knoppix 6.2.1 boots and searches for the USB devices. It finds my flash install on the CF card and uses the persistent image in the KNOPPIX directory.

Booting Knoppix this way has the advantage that I could install the VirtualBox guest additions. Now I can use a shared folder on my Windows host. The main disadvantage I see is that I need some disk space for the iso image.

My first idea was to install the PLoP Bootmanager on the virtual hard disk as it is possible if you use VMware Player. The PLoP Bootmanager adds the ability to boot from a USB device. But with Oracle VirtualBox 3.2.12 I had no success.