Instructions
Exit your Mugen game and go to the folder where your Mugen executable file resides. Double-click the "Chars" folder from there. Open the folder that corresponds to the character you wish to edit.
Launch Notepad from the Start menu. Locate the file with the ".cns" extension within your Mugen character's folder. Make sure the file name of that CNS file is the same as your folder name. For instance if you are editing the character named Sonic, you must edit the "sonic.cns" file. Drag that file to your Notepad window.
Click "Edit" from the Notepad menu bar and go to "Find." Type "xscale" (without quotation marks) and click the "Find Next" button.
Change the number next to the "xscale" field to a higher or lower number. Higher numbers will increase the character's width, and lower numbers will decrease it. Change the number associated with the "yscale" field just below so you can adjust the height of the character.
Click "File" and select "Save" to save your Mugen character size adjustments.