
Board: M.U.G.E.N Development Help
There is a workaround, though. I'm guessing you're using the same button to select all 8 characters. The fix is to use two different buttons to select characters 7 and 8. So for example, if you use button "a" to select characters 1-6, then use button "b" to pick character 7 and button "c" to select character 8. Note that if you use the same different button ("b" for example) to pick 7 and 8, then 8 will once again default to palette 1.
Hope this helps.