Seamless Mode Not Working Correctly in Virtual Box

This appears to be a window manager issue. As a VirtualBox guest under Windows 7 Premium 64-bit, Ubuntu 12.04 64-bit has the problem mentioned: the Ubuntu background image remains displayed. Using Ubuntu 12.04 64-bit with the GNOME window manager (installed via Ubuntu Software Center), however, seamless mode works correctly. Using Xubuntu 12.04 64-bit (which uses the XFCE window manager instead of Unity), the seamless mode also works correctly. Thus only Unity experiences this problem.

Until the Unity team solves the issue, use the Ubuntu Software Center and type in 'gnome' and use it to install the GNOME Desktop Environment. At log-in time, click on the Ubuntu icon and select one of the GNOME choices [GNOME, GNOME Classic, or GNOME Classic (no effects)] for your session. Seamless mode works as intended.

Alternatively, use the Xubuntu distribution. Seamless mode also works as intended.

Enable 3D in the Virtual Box Machine Display Settings. You will need to shutdown or power off your virtual machine first.

Without it, seems to make it that the guest's background and all appears. It's basically full screen but with the host's HUD stuff visible.

Host: Windows 7 64bit Guest: Ubuntu 12.04

Power off the VM and then boot it back up and log back in. It will work.