It was supposed to look disheveled, and messy, like she's been roughed up.

Ka-Tra

Do you think Shang Tsung pulled her hair out of the ponytail?

Her hairstyle when she was captive gave off a 1980's vibe, and it was a mid 90's movie. Something along the lines of these.

Whether it was meant as a throwback who knows.

Wow. Cool. The 80's and early 90's are my favorite eras.

For movies in terms of originality I agree.

I wonder why Shang Tsung undid her ponytail if he was going to challenge her?

As silly as it sounds, maybe he didn't want her to use her hair as a weapon like Sindel can (to a T) with her deadly hair grab toss (more standard moves and Fatalities).