The following is an excerpt from page 113 of the Warhammer Chronicles 2004 release with an expanded explanation regarding Characters in Units.
We've had a few questions concerning whether a character's mount affects which units they can join, and what effect it has on things like ranks and targeting. So, to clarify:
Unless otherwise forbidden by the rules, a character can always join a unit, regardless of their mount.
A unit always moves at the speed of its slowest model, so if a character on foot joins a cavalry unit, they would move at the character's Movement rate.
A character only gainsif part of a unit of 'similar sized models' (Warhammer, page 100). The same applies to targeting characters within 5" of a unit. This does not change, whether they are actually within the unit or not. So a character on a horse can still be picked out if he joins a unit of infantry, for example. For these purposes, a character on a monster base (40mm or larger) counts as being bigger than normal cavalry.
A character in a chariot cannot join a unit unless it is a chariot unit, and only a character in a chariot may join with another chariot unit.
A character takes up the space of an equivalent number of rank and file models as their base fills. For example, a cavalry model would take up one space in the first rank and one space in the second rank of an infantry unit. These ranks still count as complete if four 'spaces' wide or more, whether that space is filled with a rank and file model or a character. See the diagrams below: