it's a dipswitch setting. one controls "violence" (whether fatalities can be performed) and another controls "blood". there's also a 3rd one for "low blows" (the Johnny Cage split punch).
check this pic I have attached, match your dipswitch settings to that. you can access this section in the screenshot by going into Test Mode -> Diagnostics -> Dip Switch Test.
just figure out which bank is which, and make note of the orientation on the switches that says "ON" and flip them accordingly. you'll probably have to use a little flathead to move the switches, so be very careful that you don't slip and stab the board, especially while it's on.
you really don't need it on to do this, just follow my picture, turn it on and compare until you get it right.
EDIT: the "1 CIRCUIT BOARD" one should be left alone. this was just a screenshot taken from MAME that works with either setting, it's for the Memory Expansion board. very few boards had the larger 8 mb ROMs that didn't require the separate rom board, and I doubt you have one of those, so if it's on 2 circuit boards, leave it alone.