Recommended settings are Classic Mode, 200%, 90s
Classic mode means there's hold buffer, which makes combos and fast sequences flow much easier and more naturally.
200% is the best health to harmonize the damage from combos and from knockdown moves, such as projectiles, while working perfectly in tandem with the other suggested rules.
90s is a comfortable time to play with, that fits the best with 200% HP and the rest of the recommended rules.
Infinites, tiers and stages
The biggest issue a BvN ruleset must address is infinite combos, which make it so that any relevant hit can guarantee a KO. The recommendation for serious games is to limit combos so that each move can only be used twice, making it so that characters best bread and butter combos range from around 600 to 1600 damage, which means combos do from 30% to 80% of a full health bar (in 200% HP).
It is also noticeable how strength varies very much between characters, in a level that low tiers simply can't compete against top tiers. It is advisable to fight with characters with similar levels of strength, such as defining tiers and competing in tier locked games, not using characters above the determined tier.
Some of the stages in the game are also not ideal for competitive play, as their high platforms potentialize camping and severely cripple a lot of characters. So the suggestion is to avoid stages that are too big vertically and/or have too many platforms.