Fight as K1 or
Successfully complete the game in story mode on level 8 to unlock K1 and
K2 in versus mode.
Fight against same character:
Select versus mode and have both players select the same fighter. Press B to return to the menu. Have the player that wants to have the alternate color select the same fighter again first, then have the other player select the same fighter. Both players should now have the same fighter, with the same color.