You make several wrong inferences in your question.
some of my co-players are using Mouse and Keyboard to play, and are called cheaters
I would like to know why PC gaming on Mobile games is considered cheating?
Mouse and keyboard does not inherently mean PC gaming. Mobile devices (at the very least Android, I have no iOS experience) are able to work ...
You're basically asking a legal question in here as well so let me preface this with I am not a lawyer. And if you're concerned about laws and such, ask one for your location!
Is it a crime? No, there's (probably) no law on the books that make it a crime to play games on emulators (assuming you're not bypassing DRM I suppose). Breach of license (the Terms ...
Not right now, no. Xbox 360 emulation is still very premature and it is not yet possible to play the majority of retail games from start to finish.
Besides, VirtualBox won't be able to run the Xbox 360 OS either since VB only virtualizes x86 and x64 platforms. Xbox 360 uses the powerpc architecture.