Are you using the correct VGA? the one that works is on the PCI card next to the Ethernet port and the serial port, NOT the one near the AV, out you may need to remove a metal cap to access it. BTW that is a common rookie mistake. Also are you waiting long enough you won't get anything from the AV out until the PS2 side is loaded and initialized, that takes a few minutes.
No, ti is all on an embedded PC, you have to replace that to upgrade. and the version of linux here is too old, upgrading that will break the dev programs on the tool.