Ermac's origin suggests that the souls that made him up had no connections to one another beforehand. They were just many different warriors over the ages who rebelled against and were killed by Shao Kahn and eventually he thought "I'm gonna take all the best souls I've ever stolen and make a warrior out of them and put a spell on that warrior so it'll fight for me and be my most powerful assassin."

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Ermac is made of whole legions of souls. That's the exact word one of his bios or endings uses, "legions". And all of them were Outworld's greatest warriors before they died. And all of them were possessed by Shao Kahn.

THAT many souls, all of them held by Kahn? There's no WAY they all belonged to the same place like a cult or something. With numbers that big and a background as wide and varied as "all of Outworld's greatest warriors", they automatically have to all come from different backgrounds and time periods. Look at who Earth's greatest warriors are. You have a monk, an actor, two soldiers, a few ninjas, a cop, an indian shaman, and on and on it goes. None of them are from the same place. And that's JUST during this time period. Ermac's souls are the greatest Kahn has stolen in all of Outworld's whole history.

And maybe SOME of those great warriors actually worked for Kahn, and he just decided to keep their souls when they died so they could serve him further in death...but usually if Shang or Kahn has someone's soul, it means that someone was an enemy and he killed them himself.
The whole point of Ermac's story is that the people who make him up are all different, he is a diverse crowd inside a single being. That's why they give him costumes that hide as much of his face and skin as possible now, because he can't be thought of having just ONE identity. There might be men and women, the young and the old, black people and white people, etc. all combined inside him. Saying every soul in him was from the same source, they all belonged to one little group, pretty much defeats the purpose of the character's concept.

So, if I understood well, Ermac should, story-wise, pretty much be the strongest of Outworld warriors, after Kahn.... not to mention, the strongest of ninjas.

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Red and black are the colors of Shao Kahn's army, flag, and self. You don't need to make up a story reason for that. And the souls work together because they've been merged into one. It's sorta like an ant colony, or the Borg. Hivemind.

A legio accosts roughtly 4000 people...huh.

Gestalt personality. Also a schizophrenic experiences voices and hallucinations which according to him or her are existint entities in quite a few cases. What you probably meant is multiple personalities (currently called Disassociative Personality Disorder).

Hivemind, collective conciousness you name it. This has little bearing on story and almost zero to the narrative, so I don't think they would go to such details in explicit manner.

If ermac is under a spell from Shao Kahn how did he undo it? I know kenshi met him and helped him. Can someone clarify on this?

There isn't much to clarify because we don't know the exact details, but basically...

During Deadly Alliance, the Special Forces sent Kenshi into Outworld to rescue Cyrax, who was lost there. While Kenshi was in Outworld, he met Ermac. Somehow Kenshi, with his telepathic powers, freed Ermac from Shao Kahn's mind control. To show his gratitude, Ermac in turn taught Kenshi how to do the Telekinetic Slam move.

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I figured it had to with telepathy. It all kinda makes sense now.