Skarlet is actually a being made by Shao Kahn himself
Skarlet is a very ferocious opponent composed solely of blood. A literally bloodthirsty warrior: she gains strength during combat from her opponent's blood, absorbing it through her skin. Shao Kahn created Skarlet by collecting the blood of countless warriors, and infusing them with sorcery.
The Lady in Red is another great artwork from cosplayer Nebulaluben (Laura Sanchez) and photographers Hidrico and Jesus Clares: she wears a tight ninja half-face mask, red high heeled boots that run up to her knees and has unnaturally red hair.