Did someone rewrite their own script and call it KING OF FIGHTERS?
I'm not an expert on KING OF FIGHTERS or FATAL FURY, but I've been watching the animated movies, and even dusted off an old KING OF FIGHTERS '95 game, and I fully believe this movie was never at any point intended to be a KING OF FIGHTERS movie. This film gets everything wrong that it had to have been written as a completely different fighting film, and then when someone just so happened to get the film rights, they decided to alter their script, rather than start over.
This had to have been the case for this movie.
http://www.freewebs.com/demonictoys/