I'm having the exact same problem with Shinsenden and the patch on the site doesn't fix the problem. Game goes nuts during the beginning of the second chapter.
I've answered your PM already, so there was no need posing this in so many places
The patch on RHDN works. Checked just now. It is updated patch. Download it - you may have the old one. The only thing which comes to mind - try saving BEFORE going to King Byakko and after killing Garuda. The game loads the data before the sprites for the screen, as far as I remember. Anyway - I've just tried the patch from RHDN on nestopia and several FCEUD versions - it works.
Patch the game and if you started and saved with the older patch (and that's what you did, as I see), you need the save state from this place or before that - I've had mine from the beginning of the Chapter 2:
Here's the proof that it actually works later and the glitch is gone: