Pcsx2 version: official 0.9.6 release, beta r1888.
CPU: EERec on, VU0rec and VU1rec on, MTGS on.
Plugins used: GSdx 890 0.1.14 (software and hardware), GSdx 1873 0.1.15 (software and hardware), ZeroGS 0.97.1; SPU2-X 1.2.0; Linuz Iso CDVD 0.9.0; LilyPad svn (r1853) 0.10.0.
Description: Distorted 3D objects. No setting or plugin is known to fix it. Screenshots were taken on ESAKA1 stage using Pcsx2 beta r1888 with Logarithmic Z off, Native on, the rest - default.
My PC: Windows XP SP3, Athlon 64 Dual Core 3GHz, 2GB RAM, GeForce 9600 GT 512MB.

Just thought I'd give this thread a bump just in case anyone has come up with any solutions in the intervening years. This problem still remains and is present in all of the 2D KoF games (PAL versions at least, I haven't tried any others) with 3D backgrounds, to a greater extent in some than others. It looks like an extremely bad case of z-fighting some of the time and with the current versions of gsdx some scenes will suffer from it more in software, others in hardware.