I recently was playing with a new 4GB usb stick and I wanted it install a rawdisk VirtualBox VM on it.  This would give a portable VM with decent speed.When I was trying to create the raw disk formated disk with the following command:

#> vboxmanage internalcommands -rawdisk /dev/sdc -filename ~/VirtualBox\ VMs/usbstick.vmdk 

I recieved the following error.  I even got this error running as root.  I determined it wasn't a permissons issue.