I know that we have to use WOLFMAME106 for recording purposes eventually. As were DK enthusiasts what is the best version of mame I can play DK on for the best arcade experience.
WolfMAME 0.106 is no longer the sole version required, either here or at Twin Galaxies. For DKF you can use any version of WolfMAME that is 0.106 or newer. DKF also accepts Retro Uprising's Score Mode, which is not WolfMAME but is based on MAME 0.135. For Twin Galaxies, any version of WolfMAME is acceptable.
You'll find many varying opinions on what setup is the best, and it can depend a lot on how powerful your PC is...you'll have just have to experiment and see what works best for you. If you're going the older route, stick with 106. If you want a newer version but don't have a newer PC, try something in the 142-160 range. Otherwise, update your version with every new MAME release (which is what I do).