Hi all, I'm having the same issue with Ninja 3 on the VC.
Heh, I remember Ninja 3 being pretty buggy when it came out. Full of glitches, slowdowns and random features. It was never as slick or playable as Ninja 1 or 2, probably because John Twiddy only wrote the first two games and not everyone was able to command the C64 as well as him.
I did at least expect to make it further into the game than the green screen at the end of level one though
I just replayed Ninja 2 to make myself feel better. Now there's a proper C64 classic!