View this on it's own separate page, you might find it runs better.
How to unlock all the Characters:
Lugi - Clear Adventure mode on at least normal with Mario.
Jigglypuff - Clear Adventure mode.
Cloud - Complete 100-man Melee.
Crono - Clear 3-minute Melee.
Naruto - Clear Adventure mode with the original 13 characters.
Shadow - Clear Adventure mode with Sonic, Tails, and Knuckles.
Super Sonic - Clear Class mode with Sonic WITHOUT getting a Game Over.
Zero - Clear Adventure mode with Megaman WITHOUT getting a Game Over. This must be done on at least Normal Difficulty.
Young Link - Clear Classic mode with Link.
Inuyasha - Clear Adventure mode WITHOUT losing any lives.
Mr. Game and Watch - Clear Target Test with every character but him.
Mr. Incredible - Clear Classic Mode with the original 13 characters.
Mewtwo Clear - Adventure mode with Pikachu and Jigglypuff.
Lloyd Clear - Adventure mode with any character after having one hour of total play time.
Blue Clear - Adventure mode with Blade on at least Normal Difficulty.