I had this issue about fourteen times. I know this sounds crazy, but here's how I fixed it.
Turn it off. Turn it on, then unplug the optical cable, the biggest connector between the two, the smaller one, and then wait a minute. Plug it back in, making sure that the smallest connector plugs in last. This made it run fine for me.
...I know it sounds ridiculous, but it really worked, at least for me. Worth a shot?
EDIT: MSBS stands for Mind Shift Battle System and is a term used for all the games. The different titles are Cyber Troopers: Virtual On (Model 2, sometimes called Operation Moon Gate in Japan), Virtual On: Oratorio Tangram (import only, came in Model 3 and Naomi), Virtual On Force (arcade only, 4 player, not sure what hardware) and a home port of Force that sucked called Marz.