You have to change it using the game's original test mode. Bring up MAME's option screen (hit "tab") and select "Dip Switches". In the following menu, flip the "Test Switch" option on and it'll bring up the MK2 test menu. From there, just pick "Game Adjustment" and look for the "Computer Difficulty" option. Once you got that taken care of, make sure you go back into the MAME options and turn "Test Switch" off again, otherwise you won't be able to get out of the test menu.