Backgrounds are rendered by the 052109 and 051962 custom chips on the board. Try pressing down on them in the middle with your thumb while the game is running. If the backgrounds flicker when you press on one of the chips then that chip probably needs to be reflowed - it's a common problem with Konami boards.
Also, go into the Service Menu - if I remember correctly there's a Mask ROM Check in there which does a more thorough examination of the ROM chips than the startup diagnostic. Run it if its there and tell us what it says.