Modulation instability (MI) of cw states of a two-core fiber, incorporating the effects of coupling-coefficient dispersion (CCD), is studied by solving a pair of generalized, linearly coupled nonlinear Schrödinger equations. CCD refers to the property that the coupling coefficient depends on the optical wavelength, and earlier studies of MI do not account for this physics. CCD does not seriously affect the symmetric/antisymmetric cw, but can drastically modify the MI of the asymmetric state. Generally, new MI frequency bands are produced, and CCD reduces (enhances) the original MI band in the anomalous (normal) dispersion regime. Another remarkable result is the existence of a critical value for the CCD, where the MI gain spectrum undergoes an abrupt change. In the anomalous dispersion regime, a new low-frequency MI band is generated. In the normal dispersion regime, an MI band vanishes, reappears, and then moves up in frequency on crossing this critical value. In both dispersion regimes, the relative magnitude of the low-frequency band and the high-frequency band depends strongly on the total input power. It is possible to switch the dominant MI frequency between a low frequency and a high frequency by tuning the total input power, providing a promising scheme to manipulate MI-related nonlinear effects in two-core fibers. The MI bands are independent of the third-order dispersion, but can be shifted significantly by self-steepening at a sufficiently high total input power. The evolution of MI from a cw input is also demonstrated with a wave propagation study.