I would keep all the gameplay qualities, but I decided to make my own story. I took some of the storyline concepts brought up in SM regarding Kang and Lao as well as some creative liberties....along with some of the stuff that didn't make it to the final game.......and this is what I came up with.

And as for the made up character Ki Chao, I got his name from Blaze's bio in MKU. He mentioned "Ki Chao warriors" - the warriors that would eventually bring out Armageddon. The name seems to be connected to the fabric of the realms and bringing about chaos, so I decided to give some meaning to the name (unless, of course, there is something that has yet to be explained in an Armageddon bio).

The Shaolin
The Shaolin have existed for centuries. They are a sect of the Buddhist religion. Many years ago, a Buddhist came to China from his home in India. His name varies between the countries, but he preached his religion in the nation, much so that the emperor of China saw fit to construct the Shaolin Temple to allow worship to take place. It is within the Shaolin Temple that the Shaolin monks practice their religion. They are taught to free themselves of human desire and concentrate on the balance that binds all of humanity - and only then can one find inner peace. It is a strict discipline, and the training is taxing on the human body, but this is what makes the Shaolin so resilient. To connect with their spirituality, the Shaolin are also taught how to perform exercises and fighting styles to defend themselves and appreciate their bodies. Although they tend to live in seclusion with their rigorous training, they will make it a priority to go out into their communities to offer their services in any way. This is the way it has been for many a century. The way of Shaolin is a striving for ultimate purity. It is for this reason that the thunder god Raiden chose them to make up the soldiers of his army - the White Lotus Society.

The White Lotus Society
The tournament of Mortal Kombat was created to help the realms defend themselves from outside forces. But unknown to many of the inhabitants of Earth, it was also a defense mechanism to keep the realms seperate, for if they were to ever be merged it would awaken The One Being, and all of reality would be lost forever, including the Elder Gods themselves. Raiden had been charged with defending the Earthrealm from self-destructing, but Raiden took pride in his realm. He loved it so that he couldn't bear the fact that another realm may take it over. So he chose a sect of warriors within the Shaolin order and formed the White Lotus Society with them. Despite their holy origin, the members were grounded in China. They have served a large purpose in the nation's history, responsible for many rebellions against oppressive regimes. After each rebellion was squandered, they were thought to have been wiped out but they merely keep to the shadows, only to one day rise again when their home needs them again. But their primary goal was always to protect the Earthrealm from any foreign realm that may try to invade the Earth. Only the best and most disciplined Shaolin monks are allowed to join this group.

The Spirit World
All over the realms, each soul has the same destination after their host ceases to live. If they have purity within their spirit, they ascend to the Heavens with the gods where they find eternal peace. However, if their souls are tainted with evil, they descend into the Netherealm where they are forever tortured by the dregs within the damned realm. However, there is a middle ground within the two spiritual realms. It has many names between religions and countries, but its purpose is the same. Here is the spirit world, where restless souls exist. When their hosts passed on, they had so many unresolved issues that the gods were burdened with dragging them to their destination. The souls would not budge, but ultimately they will. Until then, they are insistent on remaining on Earth until they can find an answer to their turmoil.
However, some souls are stubborn with no purpose. The souls are connected to the very essence of the realms, as they are of its fabric, and so can travel between them with ease. The gods feared that the rebellious souls would become too numerous to move, and so would amass an army that would slowly bring the realms crashing together, awakening The One Being. They are so distressed with reality and with the gods, that they intend to destroy it all. To solve this problem, the gods created deities to keep these spirits contained. They are all over the realms, and should a spirit try to even think of creating such a rebellion, they would weaken him until the soul had lost its will to stay and the gods would snatch him to face judgement. The judgement that awaits us all when we pass on.

Liu Kang
Liu Kang was born to a humble family operating a farm in the Honan province in modern day China. His family consisted of himself, his mother Lin, his father Lee, and brother Chow. Lee was a fisherman who worked along the Yangtze River with other fishermen to feed their families on the local farms. He was raised with strong will and belief in the positive fundamentals of humanity. Liu would on occasion go with his father to fish, as it was his destiny to follow in his father's footsteps. Unfortunately, tragedy struck. The Yangtze River's dam gave in to the mass of water behind it, and it poured all over the local farms. Liu Kang's home was in the path, and the water demolished his home. When Liu Kang awoke, wet and covered with cuts, his father and mother were found dead. He searched for his brother, but With no home and no family, the young man had nowhere to turn. And so he wandered, searching for a way to land back on his feet. Eventually, Liu Kang came to find the Shaolin Temple. He begged for shelter, and the monks willingly let him in. As the days went by, Liu Kang was allowed to expel his grief in the temples, and the monks informed him of their ways. Intrigued by the idea of being released from pain, Liu Kang gave in. He began to learn the ways of the Shaolin. He became educated not only in their ways and beliefs, but also of the realms and the surrounding legends of gods such as Raiden, and tyrants the likes of the sorcerer Shang Tsung, as well as Mortal Kombat. Years went by and Liu Kang would excel at almost every facet of his craft. Eventually, Liu Kang was deemed worthy enough to join the White Lotus Society. Through the ways of Shaolin, he had finally let go of himself. However, he would always go out into the community to help with fishing. He could never let go of that part of his life. But there was one person that threatened to push his newfound peace over - that person was Kung Lao.

Kung Lao
Kung Lao was also born in the Honan province, on the other side of the Yangtze River from where Liu Kang lived. He was the son of a blacksmith. In fact it was his own father who forged his most famous weapon - his hat. Rimmed with a sharp blade tempered to the cuticle, it was a formidable weapon and his own father taught him to use it. So Kung Lao was skilled in fighting arts years before he decided to join the Shaolin order. His father was friendly with the local Shaolin monks. They kept close relations with the descendants of their greatest champion - the Great Kung Lao, who defeated Shang Tsung years ago but eventually fell to the might of Goro. It was after his ancestor for whom he was named. Intrigued by the tales of his heritage since childhood, Kung Lao desired to follow in his footsteps. And so he decided to join the Temple of the Order of Light. However, while coming up, Kung Lao lost faith in Mortal Kombat. With the defeat of his ancestor, it seemed as if the rules could be broken and the gods would be idle. Earth could be invaded any time. And so Kung Lao wanted to join the White Lotus Society, believing this fighting force was the only way to truly defend Earth. Kung Lao was given a choice when his skills reached their peak - he could join the White Lotus, or stay with the Shaolin to help train them better, as their old instructor had recently passed on. Kung Lao decided to join the secret society (a fact that Liu Kang resented him for). While Kung Lao was well-learned in his training, he resented the fact that the newcomer Liu Kang seemed to excel further than he. He was determined to be better and the two of them secretly competed against eachother. But their pride and ego did not go unnoticed to their masters. They eventually decided to allow the two warriors to sort out their differences by accomplishing a seemingly impossible task.

The Mission
Wu, the head of the Shaolin order, had kept in close contact with Shen and Wen The Elder. Shen was a Shaolin monk and member of the White Lotus. He would inspect the monks at the order and choose the ones who he deemed worthy to join the White Lotus (or the monks would speak with him if they were interested in joining), and it was the oldest member of the order - Wen The Elder - who brought them in.
The two rising stars were of interest to the thunder god Raiden. The grudge between them was of a hereditary nature. The Great Kung Lao once had a rival with Liu Kang's own ancestor Ki Chao of the same era. Both Shaolin monks were in competition to compete in Mortal Kombat. In the end, of course, it was Kung Lao who earned the right. Since then, Ki Chao held resentment for him and eventually dropped from the Shaolin order to search for another purpose. He would live long enough, however, to learn that his rival would lose his life and soul to Goro and the sorcerer Shang Tsung. Having since grown past his bitterness, he grieved his colleague's death and passed on, but his soul would not rest. He would not face judgement, as he sought revenge for his old friend's death. Thus, he began to amass an army of souls within the Spirit World seeking to track down Goro and Shang Tsung to kill them. However, each attempt was unsuccessful, as Shang Tsung absorbed them. He went on the offensive and Ki Chao would eventually find himself a target. This war caused disarray in the fabric of the realms. The Elder Gods informed Raiden that such a problem needed to be dealt with.
Upon hearing of the descendants' common feud to their ancestors of old, added on to their exceptional skills, he wanted Liu Kang and Kung Lao to handle this problem in the name of the White Lotus. The trifecta agreed, and thus the two monks were sent out into the wilderness. Their mission is to search for the soul of Ki Chao and convince him to lay down his grief and accept eternal rest before he stirs up more turmoil within the fabric of Earth. They will face opposition from the deities sent to control the twisted souls, as well as Shang Tsung's own army. But although the matter needs attending to, the true purpose of the quest is that the two monks will learn from their ancestors' mistakes.

Also, a young monk named Chan Chan follows them. He looks up to Liu Kang and Kung Lao, figures by following them he will earn his right to be included in the White Lotus Society.

STAGE 1
Liu Kang and Kung Lao are first instructed to search for the Tiger Spirit, the oldest of the guardian deities. He knows where Ki Chao is hiding out.

STAGE 2
Looking for Ki Chao in an underground cavern as per the Tiger Spirit's advice, they find the entrance to the lair of Shiva, the goddess of judgement. He would be in the most danger there (since Shiva could easily pull him up to the Heavens), so no one would think to look for him, but the monks find him. Ki Chao tells them he doesn't want to be found. But when Shang Tsung's soldiers violate the sanctity of the cavern, Shiva intends to destroy them all.

STAGE 3
Liu Kang and Kung Lao decide to first attack Shang Tsung to get him to give up his hunt. They force the guards to tell them where he is. But the young monk following them, Chan Chan, heads there first. It's a race to get to where he is, but Shang Tsung is ready. Chan Chan, unfortunately, had his soul stolen by Shang Tsung in front of them. And the Orochi hellbeast he left behind for them to deal with was a more than formidable opponent.

STAGE 4
The monks hear of disruption up in Tibet's mountain range, and so they go there to see what's up. There they come up against another deity - the Ice Spirit. It is a war between Ki Chao's spirit uprising and Shang Tsung's soldiers, and the monks are caught between. The Ice Spirit's methods threaten to destroy them all so he must be stopped.

STAGE 5
Getting higher in the mountains, the monks deal with the Wind Spirit, continuing what the Ice Spirit was attempting. Ki Chao saves them, as he sees potential in the monks for his cause. He enlists them to help him get Shang Tsung before he passes on.

STAGE 6
Liu Kang and Kung Lao follow Ki Chao to the Gobi Desert. They follow spirits until an Oni Warlord attacks them.

STAGE 7
Coming to an oasis, Ki Chao talks to both of them about their paths, annoyed with the monks' bickering, and then they convince him to give his soul up, but then Shang Tsung manipulates them in the oasis, trapping them in dreamlike states and whatnot. They are forced to deal with the Elemental Knights in the end. Ki Chao disappears

STAGE 8
Right back in the forest where they started Liu Kang and Kung Lao search for Shang Tsung, but Ki Chao attacks them himself. He decides to teach them to work together before finally going out. Eventually, he doesn't pass on - Shang Tsung gets Ki Chao's soul and the rebellion is put down as the spirits without their leader lose the will to stay.
Both monks have not resolved their issues with eachother, but have learned much from Ki Chao, coupled with Chan Chan's demise. They decide that they will eventually bring Shang Tsung down someday, though with different plans of attack.....and that's a start.

Of course, their relationship's problems will be finally resolved sometime in MK2.