This used to work in previous 1.x, 2.0, and 2.1 releases of VB. I have a screen resolution in my Debian Etch 4 guest that ensures the guest takes just a little bit less than one of my physical screen. This way I can see just enough of the host to interact when I need it.
The relevant lines in my guest xorg.conf file are:
DefaultDepth? 24
SubSection? "Display"
Depth 24
Modes "1648x936" "1280x1024" "1024x768" "800x600" "640x480"
EndSubSection?
Now that I've upgraded to VB 2.1.2, I re-installed the guest additions and rebooted the guest. But the guest desktop now doesn't show up correctly. The screen is only randomly updated, the menubar does not show, and when I type into a bash command-prompt window I only see maybe 1 out of 20 or 30 characters show up on the screen. (The other characters are there, since when I press ENTER the commands execute correctly. Only screen updates are not working.)
If I remove the "1648x936" resolution, then everything works fine at 1280x1024. (But this resolution is not wide enough and too high to fit on my screen!)
If I comment out the vboxvideo driver and use the vesa driver instead, then it comes up in 1280x1024, and again screen redraws are working fine.