I am installing Linux on Virtual Box but it says that the computer currently has no detected Operating Systems. What would you like to do?
1) Erase disk and install Ubuntu
Warning: This will delete any files on disk.
What should I do?
This is rather by design. You're inside a virtual computer. The disk that the Ubuntu installer can see is a virtual disk created and hosted by VirtualBox. In reality it's just a file sitting around on the host filesystem.
When VB creates a new one of these disks they have no partitioning and no filesystems or files. The Ubuntu installer is just echoing this state.
What should you do? Format and install.
Thats pretty much what you need to select - it will format the disk and install. Usually there will also be an option to resize an existing partition to install. Erasing the disk is fine if there's nothing already on it.