Ok, we have all heard the rumors of two hidden characters in this game, possibly more. The truth is, that there ARE two hidden charcters, their names are Yuffie and Vincent.
You find Yuffie in the first disc, in the forest south of Cosmo Canyon, just across the river. When you first meet her, it will be in a battle. After you beat her, she will say if you want to fight her again, or rather challenge you, actually. This is how you answer her "Not interested", "...petrified","Wait a second","that's right",and "Let's hurry on". Then you get to name yuffie.
Vincent is in the Nibelheim Mansion. First, you must open the safe. If you
believe you are smart enough to find a way to open the safe, first i must tell
you that there are four numbers, not three. second, i must tell you to stop
reading here. Now, for those of you that want to hurry it up, the combination is
Right 36, Left 10, Right 59, Right 97. You must do this quickly, because you
have a twenty second time limit. I suggest you heal before this, because there
is an extremely hard boss now. If you can manage to destroy him, get the key and
the Odin summon materia. Go to the basement, and open the door that you could not
open before. It opens and you wake vincent. Respond to him like so: "Talk about
Sephiroth". (when his coffin closes, press O to open it again) "who are you?". Then
try to leave the cavern and he will join you.