I did some more research and it seems this is a known bug.
Launchpad bug report
Another ask Ubuntu post talks about this very issue and offers a workaround of booting into the LTS 4.4 kernel for now, which is also what I discovered with a little trial and error.
Ask Ubuntu related post
So, until the bug is fixed it seems the recomended work around is to boot into the 4.4 LTS kernel if you want to run Virtualbox.
As the HWE kernel has been installed as default in my Ubuntu MATE installation, I had to install the LTS 4.4 (GA) kernel manually.
sudo apt install linux-image-generic linux-headers-generic
At the grub boot prompt, select "Advanced Options" for this Ubuntu installation (I dual boot and have multiple installations) and select the 4.4 kernel.
(The italic text in the Virtualbox GUI remains a mystery !)