How to beat the computer with no damage taken
When the fight starts, jump towards the CPU and kick him or her in the knees while you are in the air.
For some reason, the computer never blocks when you kick him or her in the knees.
This works against any character, and also works on Difficulty 8.
To see the Ending
Start a game in story mode. Press select to pause the game. Then press up, x, left, y, down, b, right, a, l, y. Press select to unpause and see the ending