OMG...I can't get it to work either. I don't think it's in the game.
Just stumbled onto a copy of MKII for psx on my computer o_O! I downloaded it from some IRC site a long time ago and decided to burn it and see if it works and YAY!
Anyways, my take on MKII for PSX:
Graphics are better than SNES, but much worse than Arcade. Load times are bad...but that's to be expected from a CD game. I played first time with Jax and found an AI glitch that you can expliot

Before it says fight, hold LK so you are charging his pound. Now just keep throwing his projectile and the computer either ducks or blocks until it gets to them then the stupid asses eat it every time...even Kintaro. If it isn't working for you, let go of LK and hold it again. I tried this with Liu Kang to see if it works for any character, but it doesn't. The computer seems really stupid compared to all other versions of MKII that I've played.
Anywho...I don't have to pay $8 for it, cuz I already got it!