I've thought about this a lot and I think it must have been a tough decision for NEC. At the time of this game's release SFII was the game worldwide so its appearance on PCE was important. However at this time the PCE was in a state of transition from being a everyman's machine (the HuCard era, mainstrean action games, arcade ports, etc) to an overpriced ota wank object (the Super CD era, Graduation, Dragon Knight, etc). The mainstreamers were clearly moving to Super Famicom and many people never bought a CD add on. Consider that the Super System card alone was about the same price as SFIITurbo on SFC, and a Duo was 10,000 yen more than a SFC.
I have my doubts that a Super CD could have been done as well as the HuCard because of memory restrictions. It could easily been done on Arcade Card, but that was a ways into the future. In the end I think they went with the HuCard because they knew that there were way more HuCard capable systems that Super CD systems. I'm not sure if it was the right decision though financially. It would have cost probably $40 or so less on CD, which would have moved more copies, probably.
In the end it didn't go so well. The 12,800yen price tag (something like that) drove me away from the PCE version, even though it was quickly discounted. The cost of a multi-tap, two controllers and the 20 extra bucks for the the PCE version would almost buy a SFC/SNES, and that would have been the better deal anyway since it was only a few months before Turbo hit the SFC (which included CE as a mode) making the PCE version unique only in that it could be played on a portable...if by "play" you mean "lose because you only have half the buttons you need".
People today can look back and compare SFII' on PCE versions the other two versions as if they are the same thing, but as a SF fanatic from day one I can tell you that for fans of the game at that time the PCE version became as useless as tits on a chicken as soon as the SFC version of SFIITurbo came out. We needed the Kikoken, teleporting Dhalsim, and all the balance changes, period, and only the most horrible of ports would have made us want to go back a version.