I can confirm that the rounds must be set to 2. Having them set at 1 round does NOT work. I tried it earlier this morning and it definitely does not work. Reaver is right, it makes sense since you must get a double flawless on Shang Tsung and that obviously cannot be done unless you fight him for 2 rounds, lol.
So I suppose that was a great big "duh" moment for me, but hey, at least I found that out for us for certain now, lol.
I'll tell you one thing though, Shang is one cheap little ***** for damn sure. I seem to just barely get the flawless on the first round against him and the bastard always manages to get a single, out of nowhere, random fireball up my ass during that second round. It's almost as if he knows what it is that I'm trying to do and attempts to thwart my efforts at all cost, lol.
So, does anyone have any suggestions, tactics-wise, for this fight? Are the perhaps certain characters that are better suited for it? I've tried it with a few of my best characters and all of my cheapest tactics seem useless on him since eventually he gets wise to them and gets in a hit or two.