Select the "Game Speed" option and choose the "Super X" character type on the character screen. Then, highlight the following characters in order: Ryu for two seconds, T. Hawk for two seconds, Guile for two seconds, Cammy for two seconds, and Ryu again for two seconds. Immediately press Start followed by Three Punches (you can set them to one button, such as L1). Note: The time that the pointer highlights a character must be exactly two seconds.
Successfully complete the game on the normal difficulty setting to unlock the easy and hard difficulty settings.