you didnt halucinate. That was when setos dead stepbrother tried to steal his or mokubas body to try and take over kaiba corp to turn the company back into military manufacturing after seto shifted the focus to dragons and childrens card games. the kaibacorp executives were in it because they felt it was humiliating that the former best weapons manufacturing company was now focused on said childrens card game and also setos deceased step father was alive in a program to try and resurrect himself.

and no, that was NOT the arc where there was a virtual mokuba princess. The mokuba princess arc was the first time they went into a virtual world while the noah arc was the second