Patch notes, apparently the newest patch (finally?) solves the desync issues caused by the preorder-retros of the Xbox 360 version (originally, the solution was to download them again).
Asked a friend to give it try as I no longer have the game (or a console).
Patch Notes:
Released: 09/23/2011
Xbox 360: V 0.144S-234-77c814ec
PlayStation 3: V ????-??? [update version 1.??]
General Gameplay Fixes/Tweaks
Fixed a couple of crash scenarios.
DLC billboards should now behave correctly on Xbox
You should no longer see online desyncs on Xbox that are related to alternate costumes or classic costume DLC packs.
MOTD handling and displaying code was tweaked.
Fixed a bug that could have resulted in tweakvars getting corrupted.
Fixed a crash in player select if you tried to exit out while the dlc box was open.
With the exception of Human Cyrax and Human Sektor, everyones alternate costumes should behave the same as their primary costumes and have the exact same move properties.
You can now block after a dash forward is completed if it was cancelled into from a special move. Canceling out of a dash into another dash was normalized for most of the characters. Dash Block canceling remains the same.
Wakeup attacks should have better invulnerability on them if done in the first 4 frames of the wakeup window. (this was added as a hotfix tweakable value)
You no longer get a completely free throw attempt after someone blocks your jump punch. The opponent has less block hit frames but chained combos from a jump punch will remain the same.
There were several reactions that could freeze players just before they landed from attacks and reactions such as Kanos Airball and Cyraxs Net air reaction.
Made many minor hitbox adjustments.
Tweaked the negative edge window.
Several low attacks were being parried incorrectly.
Nightwolf and Kenshi can no longer still absorb a projectile if they get hit out of their enhanced reflects before the recovery frames start.
Baraka
Baraka's Blade Spin move starts up faster and is safer when blocked.
Baraka's Enhanced Blade Charge (Blade Rush) attack goes farther now.
Barakas Chop Chop no longer auto corrects mid-move.
Barakas has a new D1 low poke.
Cyber Subzero
Cyber Subzero can no longer handcuff certain characters by catching a wakeup attack with his enhanced Ice Parry.
Cyrax
Cyrax's Buzzsaw is an overhead block and safer when blocked
Cyrax's Bombs will no longer pop someone up who is in a 2nd Net reaction or in a Buzzsaw reaction.
Cyrax's mk3 costume should behave the same as the primary costume now.
Ermac
Ermac can no longer leave an invisible fireball collision around.
Fixed damage scaling a few of his reactions.
Jade
All of Jade's Enhanced Boomerangs (Reboomerang) will now return when the first hit is blocked.
Jades Staff Grab is slightly safer when blocked.
Jades U3 attack (Pole Vault) can be ducked.
Jades 4,F3 kick (Polecat) is safer when blocked.
Jax
The armor on Jax's Enhanced Dash Punch (Dash Fist) and X-Ray (Briggs Bash) now starts instantly.
Added armor to the startup of Jax's Enhanced Elbow (Elite Smash).
Jax's projectiles (Energy Wave) recover a tiny bit faster.
Jaxs towards 3 attack (Big Leg) is now an overhead.
Jax can no longer frame trap someone with his Gotcha Grab.
Johnny Cage
Johnny Cage's F3,2 (Take Two) no longer true combos into 2in1d special moves
Johnny Cage's Nut Punch does slightly less damage.
Johnny Cage's sweep kick has less advantage on block or hit.
Kabal
Kabal can no longer leave an invisible fireball collision around.
Removed a couple unavoidable block traps with Kabal. (with F2 and 4)
Kano
If you dont charge and hold the Enhanced Kano Ball it will now keep its armor.
Kanos Enhanced Knife Toss recovers faster.
Kitana
Kitana's Fan reactions on an airborne opponent damage scale correctly now.
Kitana's X-Ray (Fan-Tastic) can no longer be reflected.
Kung Lao
Removed the pushback on Kunglao's spin when blocked.
Ground Hat now leaves both players at neutral when hit close and leaves Kung Lao at a disadvantage when blocked up close.
Kung Lao's overhead hat attack is slightly safer when blocked.
Liu Kang
Liu Kang's Parry now can correctly give a first hit bonus!
Nightwolf
Nightwolf's reflect should work better as a wakeup attack.
Noob
Noob's Teleport Slam should connect better with some opponents.
Noob should no longer be hit on the ground after he is up in the air for his teleport.
Noobs Shadow Charge hits overhead.
Quan Chi
Fixed an issue where Quan Chi's Skull Projectile (Skull Ball) could sometimes become invisible.
Added some armor to the Quan Chis Enhanced Sky Drop (Sky Stomp).
Raiden
Raiden can no longer unavoidably frame trap someone with his Vicinity Blast.
Raiden has 2 additional recovery frames on his normal Teleport.
Raiden cant be hit during his Enhanced Teleport (Sparkport).
Reptile
Reptile whiffed Elbow Dash now builds slightly less meter.
Reptile is held slightly longer after knocking someone down with the Elbow Dash.
A blocked Reptile Elbow Dash no longer pushes back.
Reptile's Enhanced Slide (Slime Trail) now has armor on it.
Reptile can no longer leave an invisible Forceball collision around.
Scorpion
Scorpion's Leg Takedown is safer when blocked.
Scorpion's Enhanced Leg Takedown (Takeout) now has armor on it.
Sektor
Sektor can now 2in1 into the front and behind Up Missiles
Sektor's mk3 outfit should behave the same as the primary costume
Sektor's backjets will no longer get stuck firing, wasting precious fuel. (Yay!)
Sektors X-Ray (Massive Missile) can no longer be reflected.
Shang Tsung
The armor on Shangs Enhanced Soul Steal now starts instantly
Shang Tsungs Enhanced Soul Steal (Soul Capture) activates faster.
Sheeva
Sheeva's Fireball is a mid block now and the Enhanced Fireball (Fire Blast) is an overhead.
Sheeva's Ground Pound can correctly give a first hit bonus!
Sheeva's Enhanced Jump Stomp (Jump Crush) now has armor on it.
Sheeva's Air Grab has better anti-air collision on it.
Sindel
Sindel can no longer leave behind an invisible fireball collision around.
Sindels B1 attack is a low block.
Sindel's regular Scream is slightly faster and the Enhanced Scream is a lot faster now.
Sindels Scream (Yell) can no longer be parried.
Smoke
Its no longer possible to handcuff opponents with Smokes Vibration (Shake) Parry.
Sonya
The armor on Sonya's cartwheel (Krazy Legs) lasts until the first collision and Archkick's (Arc Wave) armor lasts until her arch is almost over.
Sonya's 1,1,4 (Fierce Assault) no longer true combos into 2in1d special moves from it.
Sonya's 3,1,4 (Beat Up) no longer true combos into 2in1d special moves from it.
Stryker
Stryker's Enhanced Baton (Baton Bash) Sweeps 2nd hit is an overhead and is safer when blocked.
Stryker's Grenades recover slightly faster.
Stryker's Baton Roll starts up faster and the enhanced version has armor on it for a longer time.
Stryker's Grenade Toss and Baton Sweep do slightly more damage.
Strykers B1,2,2 (Beatdown) combo is safer when blocked.
Sub Zero
Fixed some of the Ground Freeze reaction properties which were causing some other gameplay issues.
Sub Zero's Enhanced Slide (Power Slide) now has armor.
The opponent is frozen for 10 additional frames to allow him to at least get a slide in for some trade cases were he could get nothing before.
Freddy Krueger
Freddys Nightmare Stance cant be repeated instantly anymore.
Fixed a bug where Freddy could get stuck being immune to projectiles.
Freddy forward and backward Teleports (Hell Shift) build slightly less meter.
Some of Freddy reactions were not damage scaling correctly.
Tweaked the recovery on some of Freddy specials.
Kenshi
Kenshis X-Ray (Soul Blade) can no longer be reflected.
Kenshi is freed up sooner now when he absorbs a projectile with his (Blade Absorb)
Kenshis F2,2,B1 (Absentminded) reaction no longer lets opponents be hit just as they hit the ground.
Skarlet
Skarlet has an additional 10 frames before she can cancel out of her normal dagger toss.
Skarlet can no longer 2in1 cancel out of her Slide attack from her Red Dash.
Skarlets back throw now does normal damage.
Skarlet can do her U3 (Lifting Leg) attack from a dash now.