Go to game start on the main menu, and select Sonic (don't press A, just make sure he is on your screen.) When you do this, do the following:

Down, Right, Up, Right, L, Right, R, Right, A.

You should hear a chime like you just collected a ring letting you know the code was right. Select a course (if you have that option) and have fun.

Oh, by the way, the computer Tails isn't very smart, but it can be helpful. (He doesn't Die.)