Cocktail mode is enabled in MAME itself inside each game. Not all games have or support cocktail mode.
There are two ways of enabling cocktail mode, and the way varies from game to game.
To enable cocktail mode, try the following:
1) Open the game you want to play in MAME, MAMEw, AdvanceMAME, MacMame, or MAME32.
2) Press Tab and choose "Dip Switches", and look for the "Cabinet Type" option and change it to "cocktail".
3) If Step 2 does NOT have a cabinet type option, press F2 and enter "Service Mode". In the service mode menus, look for an option labeled any of the following (they all mean the same thing), and change it to the opposite setting:
Screen Flip
Cabinet
Cabinet Type
Cocktail Mode
Invert Screen
Switch Sides
Note: If you have not already done so, you'll want to set your default controls for both players to the buttons on your Cab.