KFM only uses the parameter in his throw attack
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Playing around with it, it seems to have some kind of effect but no, not what I would expect either.
With some testing, it doesn't seem to have any effect on the "InGuardDist" trigger either.
I wasn't testing this right... it actually DOES affect the InGuardDist trigger, and the values behave as one would expect.
*Edit*OK, here's what I'm concluding... it works as expected, EXCEPT it seems that MUGEN is hardcoded to put the player into State 120 (Guard Start) if within the attack.dist
So if guard.dist is included in the HitDef, the !InGuardDist trigger in State 120 will immediately send you into State 140 (Guard Stop).
Seems like it just screws up the animations and you still guard, though.
It's unfortunate that guard.dist does not override the attack.dist in the players constants.