If anyone's interested, here's the procedure I used to create a fully working LXDE box with autologin! My error should be readily apparent in the first couple of lines. :p
--Create New VirtualBox for 32-bit Ubuntu
--Install Ubuntu Server 12.04.2 32-bit (Do not use any encryption)
--Attach VBoxGuestAdditions.iso to VirtualBox and remove other controllers
--Login
sudo bash
apt-get update
apt-get upgrade
apt-get install dkms
apt-get install build-essential
apt-get install linux-headers-generic
apt-get install xserver-xorg
apt-get install xserver-xorg-core
mount /dev/cdrom1 /mnt
cd /mnt
sh ./VBoxLinuxAdditions.run
--Reboot
sudo bash
apt-get install lxde
nano /etc/lxdm/lxdm.conf
--Comment out autologin line and replace username, save file
--Reboot
--Select Monitor Settings in Preferences and change resolution to "Auto"
--Resize Screen
--Shutdown and clone VirtualBox, retaining this as the base 32-bit LXDE VirtualBox.
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The issue was that I encrypted my files when I did the initial installation. I did this out of habit and totally forgot that they were encrypted. When I was able to figure out how to auto-login my previous box to the command line (by modifying the tty1 config file), I got the error: "Signature not found in user keyring". I couldn't see this error when the box was going directly into LXDE and then failing. Once I saw this error I remembered the encryption. So I started over from scratch and made sure not to use the encryption. After that, everything else quickly fell into place.
To be honest I don't regret the time that I spent on this. I learned a tremendous amount about Linux and how LXDE works in the process.
I appreciate everyone's help, especially Rex's!
Thank you and have a fantastic day!