Well, all of Kurogane's characters (Patchouli, Yuyuko, Reimu, Youmu, Yukari, etc.) by default are on Lunatic difficulty (you can adjust it to Normal, Lunatic, or Phantasm in the Options file), so there's also that. Though I can accept Kurogane's stuff being difficult, if it's like that in IaMP. I never played IaMP so no idea how tough those AIs really are. And Aotsuki's I'd assume are the same way (though I see no AI adjuster on his stuff). Just yeah, SNK boss syndrome (or SNK Boss Syndrome+ in this case, because those AIs tend to spam things moreso than read you I think).
Yeah, I didn't really set up with Koakuma at all with her books, which seemed to be one of her biggest offense. I probably should've at least tried to use those more often, but then again, that'd assume I wasn't being bombarded by attacks. And the fact that all of these lifebars I'm using seem to hide the cards, that doesn't help matters at all either...
Yuugi's only problem is the lack of grazing aye, but luckily that wasn't TOO big of an issue until that one spellcard at the end (and even if I did beat that, I'd still have Pandemonium to go through, and I don't think Yuugi would've been able to do it).
The Yuuka I was using had a similar problem to Yuugi, though she plays a lot differently, and I was using a year old version instead of the latest (oops!), so she didn't even have a dash or graze. Felt a bit spammy in her fight against Mima, but I had no choice in THAT fight....Mima was hellava aggressive like you wouldn't believe @_@;;
As for making a character? You'd have to know the inner workings of MUGEN, and that requires time to learn. It's like teaching yourself how to learn coding a game and whatnot...so basically, it all comes down to how well you understand and can make complicated coding and whatnot.