These plot holes have always bothered me. Some others are the looks of the characters: Liu Kang was supposed to have short hair back then, Raiden was supposed to have worn his white outfit but without the blue thing, Scorpion and Sub-Zero's outfits during that era were supposed to have been far more simple, and Reptile was supposed to have been a humanoid back then rather than a reptilian. (In fact, one of the things that made him cool in my mind was the fact that he started out looking like a ninja just like the rest, but slowly devolved into a reptilian creature.) Plus, when Quan Chi appears at the end, he was supposed to have worn his MKM/MK4 costume, and did not have his tattoos or forehead jewel yet.
But here is the biggest problem I have: characters being killed off who appear later in the series, namely Jade, Baraka, Reptile, Goro, Kano, Shang Tsung and Shao Kahn. In that case, I hope the boss fatalities aren't canon.
Another continuity glitch, probably due to the team not doing their homework: introducing the concept that the souls of Outworld's dead go to the soul tombs, rather than to the Heavens or the Netherrealm. This poses a problem, because Milleena was supposed to have been killed in MK2, gone to the Netherrealm, made a deal with Shinnok, and resurrected in MK3. (And for that matter, Milleena was the one person who should have died, but did not!)
This game more fully of holes than a peace of Swiss cheese. But I still liked it though. The gameplay is very good.
Oh, by the way, Hi everyone. First post.