Hey Matt,
I'm a vertical cocktail user. I use an earlier version of MAME (107) but I believe the settings are still the same. When you want a head to head split screen, hit "tab" when you are in the game then hit "video options" then hit "cocktail".
You can access these settings through the UI as well but I use them on the fly while I'm in the game.
Unfortunately, I don't think you can set it up to split just by hitting the "player 2" button. You have to adjust the settings on the fly while you are in the game. Hope that helps.