i installed my MK boardset into a JAMMA converted cab and didn't realize that 1) MK is one of those rare-ish games that requires -5v and 2) the PS in that cabinet didn't supply -5v.
the results sound a lot like your issues: it would play, sometimes for long periods of time just fine then suddenly reset, sometimes once and other times over and over. once i replaced the PS with one that output -5v it worked great.
definitely check the voltages.
ever heard what one of the DCS games sound like without -5??? omg....
honestly the lack of -5 shouldn't cause the resets. you probably just had a bad power supply.
if MK2 didn't have -5, you'd know it.
out of ALL the games that I own, I never had as much trouble with any of them as I had with MK2. largely, my MK2 has been either sitting in a box in bubble wrap, or it was mounted to a shelf for a little while (was for a Multi-Kombat) and the game barely has gotten used since about March 2009.
I popped it back into a cab just to see it back around September, or maybe it was October, I don't even know... and the game was pulling its usual nonsense with the "CUSTOM CHIP BAD" or with the no sound (it kept playing the baby crying sound over and over) and the latest and greatest development was the graphic output on it turned into this blocky mess. the game would often work fine and then suddenly would freeze up and reset and then the sound board wouldn't communicate with the main board properly.
after reseating everything, still no dice. I ran across what appeared to be some components that were a little too long that may have been rubbing against other traces... gave those the snip snip.
I know I've told a few people this now, but the problem with my boardset was actually because the game roms (as opposed to the graphic or sound roms ... I'm talking the actual game code) had corrosion on the chip legs. it was a finding that I'd only recently discovered this past summer when my DK would randomly freeze up. I sanded the corrosion off and well, no more problems with my MK2.
I can't remember if all the chips with labels on them had windows or not, if you really want to I can dig up which chips you should pull and inspect. you ideally should do all of them, cause I've found other chips with the dark corrosion (sometimes the green oxidation) on the legs too.
it's two-fold this situation, it can be caused by the power supply, corrosion on the roms, sometimes you need to press down on all the roms too. the memory expansion board can be easily removed by popping it out of the pushpin opposite the interconnect headers and just rocking the board in an up and down motion while pulling up at the same time (you should be able to remove this without bending any pins at all). throw some bubble wrap underneath the board you're working on (to prevent the board from flexing) and take your thumbs and press down on every rom. I'd personally still pull them all (using caution, obviously) and inspect the legs. if they're shiny, you can just reinstall them.
if your voltages are good and you did all your maintenance with the roms, you should have it licked.
