Kung Food for the Atari Lynx has pretty horrible hit detection.
I love the original Street Fighter. I don't have any trouble controlling the arcade version, but I've never tried to play the Turbo Grafx version to know how it controls. I'm told the controls on the TG are really awful though, even by my friends who are excellent at the arcade game.
In any event, I know that a lot of people have trouble with the controls, however I never thought that the hit detection on Street Fighter was bad.