After I installed the virtualbox additions on my Ubuntu VM in the Windows XP host, I discovered that the mouse sharing between the host and guest does not work properly. So after searching through the web, I found some workarounds. This is one of the solutions from Kirya [.net] and over here, I am noting it for my own reference.
Simply add the following lines in /etc/X11/xorg.conf,
Section "InputDevice"
Identifier "Configured Mouse"
Driver "vboxmouse"
Option "CorePointer"
EndSection
After that, restart your Ubuntu VM and your mouse will be working fine. Please read the post in Kirya [.net] if you encounter any video driver problem.