First you need characters 1-15 the beat story mode with all of the 15 characters on all difficulty modes. Then beat the game again on very hard mode with Luffy. When the credits of done there will be no image of crocodile being unlocked. Go to story mode, at the character select screen you'll see crocodile pick him and beat story mode. At the end of the credits it should show his image of him being unlocked. Now he is then free to use in any game mode.