From the manual:
[[ "SEcur 2" appears in display - CPU EEPROM 1 (security EEPROM) may be bad or missing - Replace XU27 on CPU Board and press DIAGNOSTIC. ]]
It's strange, in all my games I've never had anything placed in XU27 (it's a small 8-pin port located near the center of the CPU board). Is there anything in that socket now?
It's possible your version or jurisdiction of the game requires it. Does pressing the red button on the card cage do anything?
In any case, assuming the rest of the machine is working, getting a different version of the game chips should be easy enough and I think that would solve the problem.
X-Factor is a 'meh' game in my book, nothing that special, no bonus rounds. It's not terrible, but there are better ones out there for this platform that you could change it to.