The "No valid .cfg files" message means that Routers2 cannot find any MRTG configuration files matching the given pattern which contain valid Target definitions.
In your case, the pattern is /home/mrtg/cfg/*.cfg
Make sure you have files existing which match that pattern, and that they are readable by the web server user. If the filename is wrong, change the cfgfiles or confpath directives in the routers2.conf.
The routers2.conf file as shipped is a valid file. Really, only the cfgfiles, confpath, graphurl, graphpath and iconurl settings are required - everything else can default if necessary.
If you do have cfg files matching the pattern, and the files and the path to them are accessible by the web server user, then check the file has a valid Target[] line in in that is not commented out.
Your web server directory ( /var/www ) will probably have subdirectories cgi-bin (containing routers2.cgi) and htdocs (containing the graphs and rrdicons directories). The graphs directory must be writeable by the web server.
Since you can access the routers.cgi script, go to the configuration verification page by appending ?page=verify to the URL -- eg,
http://yourserver/cgi-bin/routers2.cgi?page=verify -- and this will help to diagnose some common problems.