I dont know anything about mugen but I wouldnt expect it to run properly on an xbox. I remember playing on a pc once and it was kinda...whats the word..RETARDED(at least compared to what I play..I win sf tournaments and stuff online and offline)
you can find all xbox emulators on xbins. google "xbins.exe" for the automated xbins software that lets you connect to their server. it doesnt go through first try then you close the program and try again and it works 2nd try. fbaxxx is great btw.
I know most people hate on Mugen, but I wanted to know why you call it retarded?
In my experience, the main problem is that generally there is horrible balance, which can be expected due to the nature of the program. However there are packages out there that attempt to balance the characters, and make for an enjoyable playing experience. Nothing however will be as balanced as the professionally produced and refined games (though I did play the original SF2 recently at a bar, and was aghast at how bad Blanka was, good god, Im glad they helped him out).
In addition for those people like the OP who just want to see Homer vs Goku in a fighting game, theres packages that allow for that too. While its terrible as a competitive (read: balanced) game, the underlying engine always seemed sound to me, controls, hit detection etc.
So in essence, if you evaluate Mugen in general as a competitive fighter, it will likely fail unless you work hard to find a more balanced package. But as a fun beat em up, imo it works pretty well.