Maybe you can try with the other crt file (the Denise one), maybe the TeensyROM is using the CRT ID 79. Else you have to ask to TeensyROM's creator where is the problem.
Viewing post in SNK vs CAPCOM for C64/C128 - Stronger Edition comments
That's it. I actually changed the HW code byte on the CRT images and they are launching now. Had few crashes though when playing...but not consistently. Testing on C64 and C128. I've mentioned it to Travis and he's looking at a firmware change. What's different about the Denise one? Just the HW code?
Denise uses ID 85 (starting with version 2.7, which will be released soon) for MD2. Older MD2 CRTs use ID 79, which was never officially assigned to MD2 but wasn't in use at the time. At some point, ID 79 was assigned to HyperBasic.
For compatibility with older MD2 CRT versions, it checks whether the ROM size exceeds 1 MB. If this is the case, it switches to MD2 instead of HyperBasic.
In the next version, Denise will support C128 in C64 mode (2 MHz) and the C128 version with scrolling can be used.
This is not a full C128 emulation. The C128's VDC (second graphics processor) is not emulated. The emulation is limited to the behaviour of the VIC-II in a C128 with switchable 2 MHz in the border area. The VIC-IIe in the C128 is also only designed for 1 MHz and has no additional graphics capabilities.
The advantage is that this can be provided within the context of the C64 emulation. In Denise's C64 menu under System Management, there is now an option called "C128 in C64 mode." This simulates a C128 that has been switched to C64 mode.
Denise 2.7 is ready. (can not link here, get "turnstile" error)