Hello, as the self-proclaimed Christ Child of All Chip Guitar (can I get an AMEN!?!?!), I'd love to help you out. Are you SURE your Arduinoboy is actually in mGB mode and not one of the other modes? That sounds like the culprit that would most likely cause tons of garbled MIDI data/sounds. If that's not the case, my other guess is that there might be an issue with your EZ-AG. Have you plugged it into any other MIDI sound sources? I'd try that, too. I say this because I've used MIDI guitars with Arduinoboy and mGB extensively in the past and a garbled mess of noise doesn't seem right at all. mGB is set to listen for channels 1-5 and will separate them without any problems. Be sure to read up on mGB and arduinoboy here.
SurfaceDragon has named many awesome VSTs if you end up going the computer route. I've totally scrapped hardware for my MIDI guitar setup because it just can't keep up with what I'm trying to do. I'm now 100% using plogue chipsounds as the sound source for my midi guitaring.
Good luck and let us know how things are going!