I'm pretty sure it is a refresh frequency problem. According to the game info (image #1 below), the screen refresh frequency for MK was 53.204948 Hz.
Look at Image #2 below. In the ADVANCED tab of Mame32 I would try changing the refresh frequency to different settings (use 53 Hz if you have it). Choose one setting and launch the game. If it works, you're done. If it doesn't, hit ESC and then try another frequency. Be sure and hit APPLY at the bottom of the settings window before hitting okay.
If none of the frequency settings make it work, then you probably want to force the resolution and select HARDWARE STRETCH. I would use 640x288 to start with and then go through the routine of choosing the refresh rates until one works. Once you find a setting that works, then you can try different resolution settings to see if you get one that most closely fills the screen.
Good luck.
PS - click on the images to make them full size and readable.