When fighting on 'The Portal Stage' in a 1 or 2 player game, you can fight Smoke if the following steps are taken. Dan Forden must appear at the bottom of the screen and yell 'Toasty!'. Down and Start must be held at the same time right after you see Dan Forden. Once you meet all these requirements, you will fight Smoke at 'Goro's Lair'.

Notes - Dan Forden will only appear after an uppercut. His appearance after an uppercut is random though.