Not sure if this is a problem that can be fixed via surreal.ini, or if there is something else going on here, but on 4-player Mario Kart VS mode, I am experiencing several problems. First, the graphics on some maps are so distorted that it is impossible to even play them (polygons flash from their normal color to white and back all over the screen). One other thing I noticed is at the start of races, depending on the track (the situation is always the same on each track), the game will go far too fast. I have multiple xbox's, one of which has an upgraded cpu and ram. The problems occur in both cases. I did not notice these problems with less than 4 players.
I would try adding (or changing) a Counter Factor value and seeing how it affects VS mode and Grand Prix. These are all known issues that the real solution is a core update. Also try a different video plugin. B5.4 has a bug in Rice 5.60 that causes texture issues.
any ideas why the new version brought these problems? also any recommendations on what to change besides video plugin? good luck and i will keep posting if i find anything that helps.