start with this, disconnect the sound board completely and all harnesses. MK2 will run fine without it, just wont have sound.
next remove and inspect, then reinstall the chip you say smells funny. you'll want to use an appropriate IC puller for it and not just pry it out with a screwdriver or something.
while you're at it , pull inspect and reinstall the other 4-sided socketed chip while you're at it.
check for burn marks, signs of oxidation (all of the pins of both the chip and the socket should be look shiny and polished). Also check that none of the pins look mis-aligned, crooked or pushed in too far (on both the chip and the socket). and check for cracks in the socket, especially in the corners. The plastic can become brittle over time the corners will crack and then it doesn't make good contact on the pins anymore.
Once you've done that try powering it back up without the sound board or any of the sub-harneses, see if it boots and check the 5V and -5V pins on the JAMMA edge.