In order to charge chakra you must have less then 3000 power points, then hold down button and backward button, while holding these press "z" button and hold it. Note: there could be difficultys with player2 configuration. I don't know what button configuration you set, but if you have difficultys performing this move with player2, then instead of using down button which u set in player2, use "pad 2" button, this is a very default button, even if you don't set this button in your player2 configuration, it will work.
Ok, it is hard to explain but i will try. as you can see there is seal system. If you press "z" button , then "y" button and then two times "x", then it will shot katon (fire attack) , but if you do this move same as before , but before you press "x" button last time you must hold down button , then it will shot chidori.
