His sprites are edited from Iori Yagami's sprites in The King of Fighters XI. His voice clips are slightly edited from Goodman's (Neo Geo Battle Coliseum), K', and Rikard (original Mugen character).
Element appears to be an artificially created being made by Gustab Munchausen seemingly for the soul purpose of destroying Kyo Kusanagi and Iori Yagami. To finally complete and awaken him, Gustab required an immense amount of battle data gathered from various strong fighters. He achieved this at the end of the tournament in the first game and Element awakened shortly afterwards.
Element has only made one appearance in the official King of Fighters Memorial games at this point aside from the yet-to-be-released KoF Memorial Lv2. If the player achieves the good ending in the first game by beating it with either Kyo Kusanagi, Iori Yagami, or Yukino Ozawa, an additional scene is shown at the end with Element breaking free of his containment tube. Interestingly enough, what little dialogue Element has at the ending of the game suggests that he's been in containment and being prepared for battle for years.
Not much of Element's character has been revealed at this point other than that he presumably wants to kill Kyo and Iori. It is also speculated that he could be the cause behind the appearance of Yukino's alter-ego, though it is mostly unknown at this point.
As his name suggests, Element has control over different elemental powers, and will most likely being able to utilize a wide-variety of them in the second game. So far, only brief footage of the official version of him has been seen in an old trailer of KoF Memorial Lv2 which depicts him using slashing motions to harness what appears to be fire and ice-type attacks. He also appears to have an HSDM in which he throws a strange orb of grey energy that sends the opponent flying into the wall. The old trailer has been taken down at this point, however.