Ubuntu on virutalbox - strange screen with colors after boot.

Hi,

I wanted to test Ubuntu on my VirtualBox so I decided to try a liveCD version. I have Windows7 64bit. On VirtualBox I set a machine for Ubuntu 16.04.1 (-desktop-i386), so with 32 bit.
I also set in the machine to boot from ISO file of Ubuntu, so that it can act as a LiveCD. With this I don't have to install Ubuntu.
Here is where the problem starts. When I ran the machine when Ubuntu is loading i get this screen (image below):





I tried to run the same Ubuntu ISO file on an old computer with Windows XP (32 bit) inside VirtualBox and got the same result.

My question is what could be the cause?

Thanks for any help.
Luke