Your first problem shown by the ini file is the ludicrous value of prescale. Prescale has a useful range of 0-4 for the majority of games on MAME. Turning it higher than that eliminates the ability of HLSL to show any CRT effects and tortures the hell out of your CPU and GPU for no reason.
Secondly, please check if you get any of the same errors with HLSL disabled but all other settings the same. According to several people that mslug thing is not unique to HLSL, and the other problems may not be as well.
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