UPDATE - use this strategy : After playing against Shao Kahn many more times I've found a new way to beat him. Stay close to him and whenever he attacks either jump over him and uppercut or teleport and uppercut or combo him. this works because he never jumps, unlike other normal characters. if you see a hammer flying at you jump, do not block!
I hope this helped you, and i hope it works on higher difficulites. I don't see why it wouldn't.
this is also how to unlock hidden fighter quan chi - quan-tease
you will also get there will be blood(spill 10000 pints of blood) by playing thru story mode
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