By setting the BIOS to PEG you have disabled the iGPU. That is the correct setting.
Use one of the adapters that was included with your GPU to hook the 2nd monitor to your 270x.
When HDMI is the primary input Catalyst Control Center always sets the GPU to overscan, and this is why you have black bars and probably "fuzzy" text.
To correct this right-click on your desktop and select AMD Catalyst Control Center. Once you are in Catalyst Control Center navigate to: My Digital Flat Panels\Scaling Options. Set the scaling slider to 0% and then click apply.