I think you need to slow down and take one thing at a time....... because you're missing some of the simpler key information being given to you.
1. Does the original JAMMA game display correctly on your monitor?
(the one mounted inside the cabinet)
This information will help us sort out your video color problem.
2. The audio screw terminals on the J-Pac are audio INPUTS.
Meaning you have to have an audio signal FROM your console going into those terminals in order for the sound to work on the cabinet speakers through the J-Pac. You may also have to run the audio from the PS2 through a small amp and then into those terminals in order to have enough power to drive the cabinet speakers correctly.
3. It seems that the J-Pac gets it's power from the keyboard or USB connection when something is plugged in there. So you may want to try and run a PS2 thru cable from your X-Arcade to the J-Pac and see if you get some LED activity. (power) This may also sort out some of your video issues. Basically it seems like your J-Pac has no power going to it right now. I'm not certain it'll help, but worth a shot.
Can you take a closeup picture of the Playstation to J-Pac adapter that you have ?
And of course reading through Ultimarcs information may also spark an idea of something you've missed.
http://www.ultimarc.com/jpac2.htmlAnd since you do have a picture of some sort, then there always a chance that your J-Pac or Playstation adapter is faulty. (but let's get through the basics first)