Grub not working with no VGA controller?

[Liberty Young]

I'm working on with grub installed on a DiskOnChip on a Single Board
Computer (embedded pc). Grub will not boot past stage2 with no VGA
controller on the SBC. 

I have grub working just fine on the diskonchip when a VGA daughter
board is installed on the SBC. I have in my menu.lst the options for
serial output: 

serial --unit=1 --speed=9600 (i have also tried adding --port=ttyS1 and
--dumb)
terminal serial 

As expected, i have a serial interface, though again, when i have a VGA
daughter board mounted on the SBC. 

With no VGA daughter board, Grub loads as normal, but after stage2 (with
the string of dots following), the system hangs. I get no output, no
menu, and worse, no boot of my system. 

One thing to note: Our BIOS redirects stdout to the console. 
Any ideas on how to resolve this?