Freeplay, and most all of the other options in a DL cab were done via dipswitches... This, I do know to be a fact... This is most likely your problem with the credits staying on 2 all the time...
I also know, that MonMotha is right about the LD players... They have to be a certain one, or else you'll need the conversion card in order to make it work properly... This, could very well be the problem with the video not working right...
Best bet is to go to
http://www.dragons-lair-project.com/ and grab the manual, and double check your dipswitch settings, with those in the manual...
Or, there's also a forum you can post on and explain your problem... Those guys over there, Jeff Kinder, along with quite a few others, are VERY good with these games...
Hope that you get it sorted...