Arghhh... The blood hurts my eyes.
Here's some pointers for your next attempt.
Study actual game screen shots so you can get the placement of all the extras right, i.e. life bars, winning medallions, characters etc. You should also darken the arena and life bars if you're going for a Fatality.
Come with something a little more exciting and more visceral. This isn't that "cool" of an idea and wasn't executed well either.
Make sure you think of things like joints, Liu's legs should be bent at the knee, not sticking straight out.
Think about color composition as well. Not only is the blood really flat, boring and repetitive, it blends in with Liu and the arena making it hard to see. Also, carry the gore down to the ground. All that blood has to land somewhere.
Liu's left arm should be behind Baraka's right arm most likely. It'll look better that way at least.
There aren't any obvious entry or exit wounds where Baraka's blades are going through Liu.
While you may be new to fake making, ctrl+c followed by ctrl+v isn't going to garner you much praise. Most people have seen the extent of copy and paste jobs, so you might want to start off small and work on editing a sprite. From there, edit another one, they put them on a background and add some yummy blood effects.
Remember as well, if you're not satisfied with it, we definitely won't be.
What you did right; you didn't make it too crazy or lump a bunch of extra junk in there (like random senseless placing of other characters or body parts) or lose any pixels when pasting the sprites.