To play as the real Kyo, highlight the random character box [?] at the character selection screen, then hold the Start button while moving the joystick LEFT, UP, RIGHT, DOWN, LEFT.
To play as Iori Yagami, highlight the random character box [?] at the character selection screen, then hold the Start button while moving the joystick RIGHT, LEFT, UP, RIGHT, DOWN, LEFT.
Hold START while selecting your characters's order. You'll see their picture instead of the usual question mark.