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PC2700 on 266Mobo

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Any ram that has a higher rated speed then the motherboard's supported speed will run fine. Everything is backwards compatible. When you start overclocking you will see that having ram rated for a higher speed than the board's default will help.
I have heard that using PC2700 on 266Mobo gave memory a bad signal
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Not exactly sure what you mean but all ram is backwards compatible. PC2700 will work fine on a PC2100 board.
The ram will just run at the lower speed until you overclock and then it will run at least as fast as the rated speed and it should go even higher if you overclock beyond the rated speed if your mb has the ability.