While I don't like it when people play as my old characters as I consider them to be really bad that I don't really recommend them, I'd still be kind enough to tell you the issue...
I had this same issue back in 2016 when I got MUGEN 1.0 RC8, and then I got 1.0, and it worked fine.
Besides... I think I recall my Arnold being 1.0+-only which could also explain your issue.
Besides who plays WinMugen nowaydays other than for the cheapies... 1.0+ is better.