After some further running around. And reversing from the bracket visible in the 1 minute capture.
I have found a way to reproduce the Xio winning against a cured Lee.
At least for me.
Platform: Xbox Series S
Location: Bankok - The Dragon Arcade
Description:
Xiao Hu wins against a cured Bruce Lee in fight number 13, failing the mission
- Fight 13 (demi-finale left).
- Lee at the top bracket, enters the mat from the south/left for the audience.
- Xiao at the bottom bracket, enters the mat from the north/right.
Steps to Reproduce:
- Using any authorized disguise do the following tournament changes:
- During fight number 3, Lee first fight, swap K.Edward and Zen (Zen to fight number 4 against Chau).
- During fight number 4, swap Lee and Xiao, (Lee to fight number 9 against K. Garcia, Xiao to face Zen in fight number 10 after his victory in 4 sets in)
- Cure Lee with the antidote from the safe after he is poisoned by Xiao Hu, in the lead up to his fight against her.
- Xiao wins against a cured Lee in fight number 13.
All remarks of “apparently no factor” elements in the post above are maintained.
Which Guard, Bodyguard, or even Tournament Judge disguise is used to do the swaps also looks irrelevant.
Frequency: Unknown. Probable always.
Screen capture of the second, reproduced, instance:
Hope it helps 
EDIT:
Interesting finds.
After reproducing the same steps another time, with the same result, for a third time.
In a fourth run, with everything else identical:
- 47 swaps and officiates all fights courtesy of a Durian to the Tournament Judge before fight number 3
- cured Lee loses against Xiao in fight number 13
In a fifth run, during the intermission before the demi-finale, and everything else identical:
- swapped Lee with H. Peng
- swapped Xiao with L. Yu
- Xiao and Lee are still facing each other, entering from the same side of the mat after the same build up, but in fight 14
- Lee wins against Xiao, as normal
In a sixth run, during the intermission before the demi-finale, and everything else identical:
- swapped Lee with Xiao (Lee now at the bottom bracket, Xiao at the top one)
- Xiao and Lee are still facing each other, still in fight number 13, with the same build up but each entering from the other side of the mat
- Lee wins against Xiao, as normal
In a seventh run, building from the ground up the swaps for a different build up:
- swapped Chau with R. Cutmore during fight number 3
- swapped Lee and Xiao during the quarter finale intermission (Lee facing Garcia in fight number 9, Xiao facing Edward in fight number 10)
- resulting with a demi-finale with all sub-targets still standing:
- fight number 13 Lee (up-left corner of the bracket) facing Xiao (low-left corner)
- fight number 14 Zen facing Chau
- cured Lee loses to Xiao in fight 13
Not to be too forward.
But knowing the game relation to randomness (hem, the roulettes from the Banker ET)I would guess the direction of the blow by blow of each fight is created from the substrate of a programmed set assigned to the fight numbers and the bracket/mat position.
And then refined with the participant “weighting” / assigned prowess, to dynamically create the movements sequence.
In some particular fight and bracket positions, the combination result might have some failures compared to its intended design.Or it’s not a refined calculation and just the meeting of the participant health pool vs opponent strength with the set blow-by-blow events of the fights. Some of them might just have an unlucky bad streak to the intended preferred participant.
And then the game follow them to their uncaring consequences to the fight result, since it looks to be a fair look at the systemic actual events on the mat.