How do I setup another monitor with Ubuntu VM (virtualbox)?

I am running Windows 7 host, Ubuntu guest inside of Virtualbox. I have installed guest additions, but when I go to display settings it stills says Unknown Display and doesn't let me add another monitor (added another monitor to this VM in virtualbox following instructions I found online). How do I get this to work? Have tried reinstalling guest additions but no success so far.

It is very easy. Shutdown Virtual machine. Next go to virtual machine settings->Display. You should simply make Video RAM in virtual more than 64MB and make display count 2.

After this changes you should start VM and open Widows 7 change display resolution(Tool than configure display and its resolutions).

Here is video with WinXP but it would be very similar in Win7

UPD

Sorry. Here almost the same situation like by you: Host Ubuntu, Guest Ubuntu, VM Virtualbox. Sorry that it all in Russian(in English this settings have same places) but you can see that i have Guest Ubuntu with mirrored screens and Display settings. If i try to resize one of the screens other screen will be automatic resized.

I found the solution for Ubuntu version 14.04 and above:-

1. Set the number of displays to 2 or more from Virtualbox VM Settings(right-click on VM) -> Displays
2. Then launch the VM and hit Ctrl(host-key) + C. This will show the Virtualbox menu at the top of the VM window
3. Go to View -> Virtual Screen 2 -> Enable. This immediately enables the seconds screens

If you have more capable hardware enable more screens this way.