That means you need to either change some of the settings or re-make your screenshots. They tend to squish into each other for one of two reasons:
1. The screenshots are all quite similar - maybe there's vast expanses of black due to disabling some layers, maybe the game is just not very detailed - so an incorrect placement matches enough pixels to go under the "stop looking for a better placement if it matches this well" threshold. Solution: decrease that number (it's the bottom one). Problem is, that makes it go a lot slower. Decreasing the pixel search distance will speed it up again, check the log to see what match distances it needs. Make sure the emulator isn't dropping frames, though.
Try looking at the log for the bits where it was matching OK, and see what kind of match levels there were. Choose a threshold a bit higher than them and try again.
For the next version I hope to make some little graphs for the stitching stats to make it easier to tune the config.
2. There's a little bit of detail on the screen but certain static aspects - the status display, main character, etc - end up being more consistent frame-to-frame than the background details. The solution is to try to re-make the screenshots with sprites turned off, or if there's a status bar (not the case for Micro Machines) get something like Irfanview to crop it out of all the screenshots.
The final option, which is one you probably have to fall back on quite a lot, is to watch what it's doing and hit the Autostitch button as soon as it starts screwing up to stop the process (even better, just before). Then save out the correct stitch, delete the images it used (see the log to see where it got up to) and restart. Then you can manually merge the parts.
After you use it for a while you get a sense for how to grab screenshots that avoid such problems.
