you need sff v2 or fighter factory 3 to edit 1.0 default screenpack and it on mugen1 folder or you need change mugen.cfg search for motif = mugen1/system.def change to motif = system.def
Maybe your just opening the wrong thing, like i did when i very first started with Mugen. Open the System.sff in the Sprite section, dont open it with the Button "Open Character" because you want be able to select a .sff nor will any sprite pop up If thats not the problem. Just do what rizki29 said I only know basic stuff (only a little tough, i cant even fix a palette problem -.-)