If Queen Elizabeth I was a virgin queen then how is there a Queen Elizabeth II?

Monarchs are known and counted by their first names, not by family or dynasty. The present Queen of the United Kingdom is Elizabeth II because she is the second person named Elizabeth to ever to be Queen of that country or one of its predecessors, such as Queen of England.

The numbering works a little different than the way commoners of the same name in the same family would be numbered, because of the wide influence of a monarch.  

Elizabeth I the Virgin Queen

Sometimes the name is used more than once even in different blood lines, so even though she might not have had any children, another queen can choose that name.
Queen Elizabeth I never had a daughter. In fact, she didn't have and children at all.  

Queen Elizabeth III?

In monarchies, names bear no significance involving relation or lineage. Queens Elizabeth I and II just happened to go by the same name.
There has never been a Queen Elizabeth III. At the moment the Queen of the United Kingdom is Elizabeth II.
Elizabeth I never married and died childless at aged 70. She was therefore succeded on the throne of England by James I, the first King of England and Scotland who reigned until 1625.
The following monarchs were : Charles I (1625-1649) ; Charles II (1660-1685) ; James II (1685-1688) ; William III & Mary II (1689-1702) ; Anne (1702-1714) ; George I (1714-1727) ; George II (1727-1760) ; George III (1760-1820) ; George IV (1820-1830) ; William IV (1830-1837) ; Victoria (1837-1901) ; Edward VII (1901-1910) ; George V (1910-1936) ; Edward VIII (abdicated 1936) ; George VI (1936-1952) ; Elizabeth II (1952-present day)
Note from a pedant
Queen Elizabeth II is Queen of the United Kingdom of Great Britain and Northern Ireland.
King James I of England was also King James VI of Scotland and his succession to the throne of England began the process of the "Union of Crowns"
The title "Queen (or King) of England" no longer exists.