Harddisks have a protection method into which you can lock the disk with a password. You can only access the harddisk contents after you unlock it with the correct password. After a power failure, it's locked again unless you disable the security after the unlock. Some arcades using harddisks utilise this technique to protect the harddisk contents. In case of the megatouch xl, it's irrelevant. It also could mean that the program can run without the security dongle in place. So basically, the software has been patched/cracked to run without security dongle.
In your case, the idea is to replace the romdisk / cdrom with a harddisk. First, you will need to find a harddisk from which the (old) mobo is capable of booting. If you remove the JP1 "eprom enable" jumper, you disable the romdisk. If you have a problem with the io card, the solution won't work as the sound chip and security dongle are also on that io card and might be inaccessible as well. So you could end up without sound or an exotic error message.
You can clean the contacts of the io board with a pencil eraser. The riser card contacts might benefit from such a cleaning as well, as they could also be oxidated. If this doesn't work, you will need to find another boot device for your mobo. A small harddisk < 10GB might work. A compact flash card and a "compact flash 2 ide" converter are the better solution as a 10Gig harddisk will likely be very old. The CF has no moving parts. You should be able to locate cheap CF cards of 1Gig - 4Gig on Ebay. The convertors 2 ide can be found there as well. There are not much electronics on such a convertor so it's safe to even buy some chinese ones.