There are lots of lcd's that have a blurry image. I have yet to find a cure. We tried on this thread though: 7" Xenarc extremely blotchy video
As for the RAM, it could be because it is Dual something RAM. I forgot the name of it, but it is the "high density" stuff that alot of boards won't recognize. Therefore you only get half, which is what you are getting. Try a non-dual layer.