Yeah, but remember the golden rule of the fighting games: They are retroactive
Probably in MK: Shaolin Monks they say that the Tarkata's attack into the Shaolin Temple was before the end of MK1, and for this reason Kung Lao went to the tournament in search of revenge. In MK2, the game it's raised like a tournament, but really wasn't a tournament in any moment, and neither Liu Kang or Kung Lao faced Shao Kahn in MK2 (that said Tobias for many years ago). This also explains how Goro arrives at the Outworld after to be defeated by Liu Kang (because he defeated Goro in Outworld). The only doubt if the MKTeam remember that Sonya & Kano were captured in Outworld, or simply Kano escaped and Sonya (this time, with the help of Jax) travel to the Outworld to catch the Black Dragon member...
Anyway, the game FU**IN' RULZ... but... WHAT THE FUCK IS THE DEMON WHO LIU KANG TRIES TO FIGHT?!!! xD