You will need to purchase a full version. OEM is tied to a single motherboard.
That's a load of crap. I've used the same Win 7 OEM disc on multiple motherboards since it was released due to upgrades etc. Nothing short of a broken disc or broken hardware will stop it installing correctly. The only issue you might have to deal with is activation, which is only a simple phone call to a robot to fix. But it installs just fine.
To the OP, try the ISO copy, perhaps your disc is scratched or nicked or something. I had a similar thing happen with a couple old XP Pro discs i have, every attempt at an install caused a blue screen halfway through install. A untouched XP pro iso from TPB fixed that for me.
As for the no vga connection, hard to say without testing with a plug in card.