I'm having the same problem. I made a custom character by replacing the "body" parts using the original Betaman files. I saved the new SWF and FLA and named the files alex.swf and alex_fxs.swf.
If you select him as Player 1, it's fine, but it reverts to Betaman when you pick him as Player 2, or when you're in Player 1 and you press the "1" key on your keyboard, it also reverts it back to Betaman.
In this case, I replaced Betaman with my own character model, but the same principal applies...
I think the answer to your problem is that they are different kinds of skin/colors for Betaman. You should either delete those skins/colors or replace them with your character model.