Linear filtering has that problem in every game, but in SFA3 is way worse. If you want "better graphics", you can enable Texture Scaling, but the game will have some hiccups.
And why Ken? Akuma is way better
In latest version (0.7.6-1157) for Windows, the game works almost perfect, with just a few graphic glitches that appear around sprites occasionally and just for a moment. Filtering is not recommended, since it causes more glitches.
Still working fine on Windows with my NVidia in 0.9.1-808-ga537aa9:
Make sure you don't have any hacks on like "disable stencil test" or "always depth write". If all else fails, perhaps try restoring PPSSPP to default settings.
4GHz AMD 3900X, 32GB DDR4 RAM, 6GB Nvidia RTX 2060, Asus Crosshair 7 Hero (Wifi), Linux
How to ask useful questions: https://web.archive.org/web/20110214010944/http://support.microsoft.com/kb/555375
I'm not Dark_Alex, nor do I claim to be. Our nicknames are merely coincidence.