You see, Kite was copied by a rogue AI named Morgana which was meant to care for the growth of a SECOND AI named Aura who took details from the different player characters as her matrix for growth, making it possible for her to either become a wonderful person or a complete villain. However being an AI and therefore self aware, Morgana quickly realized that she would vanish once her job was done, and thusly began a campaign that spanned the original series, where she took in Tsukasa and tried to controll him into keeping others from finding Aura or destroying her minions. Then the games started, Kite was granted an item from Aura herself (now able to be alive but not quite out of Morgana's controll) to help stop her, and by the end of the 4th game she HAD been stopped, for now.
However, by the time the second set of games came out, she'd found a way to get back into a position of power, using a man named Ovan to create a digital version of his sister so he would have something to anchor himself to the game world. The character you play in the second set was another man being controlled by Morgana in the original series, but he eventually realized what Morgana wanted to do (keep Aura from ever waking up) and she knocked him out memory wise, so, with the lack of kowing what happened at that time, he's into the game now.
The reason Kite is all demonic looking is that the game itself has developed a sort of passive AI of it's own, and took memories of what Kite, Balmung and Orca were like before, made them MUCH more powerful, and sent them out to destroy any blights that might have to do with Morgana, and also have to do with hacked characters, items, enemies and areas. Hence the idea of Kite being present, but being an enemy instead. If you play TROUGH the second set, this is all explained rather better then I have done.
