The problem is this:
Nvidia and ATi cards automatically apply a bilinear filter when stretching any non-native resolution to a larger one. This is a feature built into the drivers that cannot be turned off. It has been there for years.
Volari and Matrox cards do not apply the filter.
For many years, some people wanted the filer, and others didn't. It got to the point where people would buy a particular card just to have or avoid the filters! Pretty silly.
The MAME team decided to get around this by adding the D3D blitter. Only the 2D component of D3D is used, and you can customise the filtering process. They did this for the exact reason this thread exists!
From the windows.txt help file INCLUDED WITH MAME:
-d3dfilter [f] / -flt [f]
Select the type of filtering to apply to the image when stretching. 0
is point filtering, 1 is bi-linear filtering, 2 is bi-cubic filtering
(flat kernel), 3 is bi-cubic filtering gaussian kernel), 4 is
anisotropic filtering. Note that very few graphics cards support
bi-cubic filtering, and that older graphics cards may not support
anisotropic filtering. The default is bi-linear filtering (-d3dfilter
1). This option requires -direct3d.
In other words, 0 = blocky, 1, 2, 3 and 4 are progressively less blocky (although you'd be hard pressed to see the difference from 1 to 4 in 2D, but anyhoo...)
In MAME32 EVERY SINGLE option available to MAME users is in the GUI config. In this case, it's under the video options, where you'd expect it to be. (Surprise surprise).
So once again, it's all in the manual. Rather than make random speculations, people need to go find the FREE and READILY AVAILABLE documentation that some poor bastard spent hours/days/weeks writing, and actually READ IT! Honestly, it's less effort to RTFM than it is to STFW. And you don't have to wait for a forum reply either.
Thank your lucky stars you even get documentation. When I was a lad, we had to read the source code and decipher this stuff for ourselves.
Sorry for getting hot under the collar here, but you all have the power to answer these questions for yourselves. The facts are at your disposal, and better yet come packaged with the very program you are asking questions about! ::exasperated::