It should work with WinMugen, hi-res WinMugen and Mugen 1.0. Hopefully this demonstrates the basic idea: To give an idea of how to use it, I've made a short video. I've had a stab at rendering the select screen as accurately as I could, though it's not perfect in particular the alpha blending is only an approximation of how it looks in Mugen.

It's a new tool I've been working on to enable editing of your Mugen select screen using a visual drag&drop interface.

Hopefully some of you will find this useful.