I unchecked 'Enable-3D acceleration' in the VM settings then I
reinstalled Ubuntu 16.04.1 and installed the guest additions, rebooted,
lightdm did not crash at start up.

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https://bugs.launchpad.net/bugs/1620631

Title:
  Lightdm crashes on bootup after installing Virtualbox guest addition
  tools on Ubuntu Desktop 16.04.1

Status in lightdm package in Ubuntu:
  New

Bug description:
  After a clean install of Ubuntu 16.04.1 on Virtualbox, when I install
  the guest additions to it and reboot the lightdm display manager
  continually restarts and then errors out. I'm left the other tty
  terminals which sometimes do not work. Uninstalling the guest addition
  tools in /opt and rebooting fixes the issue.

  Virtualbox version: 5.1.4 r1110228
  VBoxGuestAdditions-5.1.4

  
  ProblemType: Bug
  DistroRelease: Ubuntu 16.04
  Package: lightdm (not installed)
  ProcVersionSignature: Ubuntu 4.4.0-36.55-generic 4.4.16
  Uname: Linux 4.4.0-36-generic x86_64
  ApportVersion: 2.20.1-0ubuntu2.1
  Architecture: amd64
  Date: Tue Sep  6 08:38:03 2016
  InstallationDate: Installed on 2016-09-02 (3 days ago)
  InstallationMedia: Ubuntu 16.04.1 LTS "Xenial Xerus" - Release amd64 
(20160719)
  ProcEnviron:
   TERM=linux
   PATH=(custom, no user)
   LANG=en_US.UTF-8
   SHELL=/bin/bash
  SourcePackage: lightdm
  UpgradeStatus: No upgrade log present (probably fresh install)

  What I've tried for troubleshooting -

  Removing .Xauthority
  Verifying permissions on various lightdm system folders.
  Upgrading virtualbox
  Purging / uninstalling and reinstalling lightdm
  dpkg-reconfigure lightdm

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