Problem installing Lion Kernel Panic

Im new with this but i tried to install lion on a virtual machine.
i boot with the hackboot but then when i browse the Lion10.7.iso and try to install it i get this error

http://img543.imageshack.us/img543/6706/kernelv.png

i have an Intel Dual-Core e5400 2.7ghz
nVidia 9500 gt 1gb
2gb ram

After a fresh install, I also get a kernel panic, and am looking into why. Was hoping to find a solution here.
After an update from Snow Leopard, I get stuck on the grey apple screen.