How to boot from folder in virtualbox?

You are doing it wrong. It is technically possible to boot Linux from folder, but it would require GRUB or Shellx64 preinstalled and involves low-level fiddling with files (and many tools to use). From the way you ask the question I assume you lack the skill by far.

So, don't bother with it now. Just download ISO image and add it to Virtualbox machine (when you create new virtual machine, it even prompts you on first launch to provide OS ISO)