Bumping this thread....I had Capcom Vs. SNK 2: Millionaire Fighting 2001 running in link today. However, it locks up frequently between rounds (and always between, never during). When it locks up none of the controls work, not even the test button.
I haven't had issues with other games. It's the earlier version of the game (Rev A, GDL-0007A), maybe a bug in it?
Did you ever find out what was causing this? I just installed a VS kit for my net cities and ran into this exact same issue.