Installing Guest Additions in VirtualBox for an Ubuntu Server Guest

Installing VirtualBox's "Guest Additions" is not as straight
forward as I'd like it to be for an Ubuntu Server Guest but I figured
out the solution.

In this tutorial I am using:

• Host: Windows XP Professional
• VirtualBox: 3.1.6
• Guest: Ubuntu Server 10.04
  (Lucid Lynx
  )

So say you have a host with VirtualBox installed (I have Windows XP,
you have any version of Windows, Mac, Solaris, Linux, etc.) and have an
Ubuntu Server installed as a guest. If you want to install "Guest
Additions" for added features (such as seemless mode, copy and paste
support, or shared folders in my case), you're supposed to click Devices > Install Guest Additions...
but when I clicked the button, nothing popped up. Why doesn't anything pop-up? Did it download? Was there an error?

Unbeknown to me, VirtualBox actually downloaded an image called
VBoxGuestAdditions.iso, all without telling me. Great,  it's downloaded,
but how do I mount and install it?

First off, let's grab some libraries we need for Guest Additions to install
sudo apt-get install build-essential linux-headers-`uname -r`

Then mount it
sudo mount /dev/cdrom1 /mnt

Then run the proper executable (make sure you look for the correct one for your machine)
sudo bash /mnt/VBoxLinuxAdditions-x86.run

There will be an error that states the not all features could be installed

Installing the Window System drivers ...fail!
(Could not find the X.org or XFree86 Window System.)

But this is okay. VirtualBox's Guest Additions installs some features
that we don't need on a server (seemless mode, copy and paste, etc.) If
you want these features, you'll have to install 67MB+ of X.Org
libraries
sudo apt-get install xserver-xorg xserver-xorg-core

So it's up to you: GuestAdditions with 67MB+ of X.Org libraries or let these drivers fail and enjoy shared folders.