The missing/glitchy dots are a problem with the signal coming from the WPC DMD controller to the ColorDMD. The ColorDMD doesn't create dots. It just superimposes color on them. If you have glitches like that it means that the signal coming to the ColorDMD is distorted.

The errored dots are also interfering with the ColorDMD's recognition of some frames which is why the display is turning white, the default color for TZ.

Put the game in display test mode and run a video test. This will check writes/reads to the video RAM. If the RAM test fails, there it could be a poor ribbon cable connection from the MPU to the WPC DMD controller or the video RAM chip itself.

Reseat the wide ribbon cables that run from the MPU to the WPC DMD controller. Make sure they are aligned properly with no bent pins.

You could try a new set of ribbon cables or swapping cables with another game to see if there's any change in behavior. You might also have a cold solder joint on one of the pins of the ribbon cable.