I have an interview lined up for a pen testing job next week.  I do have a computer security background but I am relatively new to pen testing.   I was told there will be a virtual box setup that i am suppose to compromise and then writeup a report when im done scanning/testing/hacking.   My question is what sort of tools/preparation would you take into an interview like this?   What sort of criteria would YOU want to see on a report.  Any advice is helpful. 

Were you told to bring your own system to attack from or will that be provided for you?

Certainly, in addition to the technical skills, they will want to see how well you can report on it. I would recommend reading this blog post:
http://pen-testing.sans.org/blog/2012/02/09/maximizing-value-in-pen-testing

I would want to see that you can summarize the findings in a non-technical summary and that you can present the risk appropriately. I would want to see what your thought process is on how you rate risks - in other words, for this purpose, I wouldn't care what you rated findings so long as you provided thoughtful support. I would also be looking at how you tell me to fix the problem.

Start with this: http://resources.infosecinstitute.com/ideal-skill-set-for-the-penetration-testing/

And review an alternate perspective: http://www.thehackeracademy.com/the-key-skill-set-of-great-penetration-testers/

And as Bill alluded to, the most important thing is your thought process and cognitive capabilities. It's relatively easy to remedy technical gaps of knowledge, but it's much more difficult to improve someone's problem solving skills.

That test sounds odd. You're just sat in front of a single Windows system, and there's no attack system? Maybe they're testing you to see how prepared you are. Bring in a bootable Backtrack USB thumb drive and know how to add/change Windows accounts once booted to that (obviously make sure that's allowed).

When I was reading this post, I was expecting to see the result of the interview.lol