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Duo made his first appearance in 1996 with the arcade title Rockman 2: The Power Fighters, in which he acted as a sort of promotional teaser for Rockman 8's release later that year. He was touted as a mysterious new character who was stylistically quite unlike most of the other characters in the Rockman universe, and yet was somehow connected to Rockman and his friends in the past. The Capcom Secret File "Grand Rockman Exposition '96" was one of the first to explain how Duo came to be--not the character's back story, but the ideas and influences that went into shaping the character itself.
From the Grand Rockman Expo '96 page 4:
New Character "DUO" Creation Secrets
1. How it all began
When it was decided we were going to make a Power Battle 2, the subject arose of "why not have an original new playable character unique to the arcade versions?" We didn't have a lot of time to spend on it, but we really liked the idea of a new character, so we ambitiously asked the producer, "what if we used the same character in 'Rockman 8' and made it like a big tie-in event?"
Because we didn't want to just throw in another Rockman-type character, it was decided to make a character that was massively tall and would fight with punches and kicks, to make him stand out from the kind of characters that appeared up till now.
3. Newly revealed!
It's never been shown before! This is the early draft of Duo. The first time I saw it, I met with quite a shock at how much this differed from traditional Rockman design.
4. Finished at last!
Next, we completed and finalized the body design. Even after that was done however, we were still left with an uneasy feeling. (Like, is it just my imagination, or at a glance could he be easily mistaken for an enemy character...?)
5. So what do we call him?
Of course, if you're talking about naming a Rockman character, it's gotta be a music related name, right? We had come up with a wide bunch of different names to choose from, Oenker (from "ouenka," a fight song), Gunker (from "gunka", meaning war song), Kokker (from "koka," meaning national anthem), but in the end we didn't decide on any of those. I myself came up with Soul and Baroque, but they weren't used either. (And Baroque was such an awesome name, too...)
Top right: An unused victory pose
Bottom right: Flattened
Hayato Kaji (H.K.) was the artist who designed Duo. At the end of the Secret File he mentioned that "Duo was designed with an image of Russia in mind," leading Japanese fans to speculate on why. On page 53 of the Mega Man Official Complete Works book, he revealed the truth behind the comment while also explaining more of the inspirations behind Duo's design:
"I did the designs for Duo, but he started off as a robot created by Cossack, so there's still a lot of Russian flavor left in him. The shape of his head was supposed to look like a classic Russian hat, and the circles on his chest were meant to look like coat buttons... but then he turned out to be a robot from space. (laughs)"
Page 126 from the Mega Man Complete Works book held another interesting detail, that "Baroque" was also a potential name Inafune considered for the rival character of Forte/Bass. Although no author was listed for the above article from the Secret File, it's possible that it was Inafune himself. It also means that the name Baroque has been kicked around for years now, but has yet to land on one character in particular. Who knows, perhaps someday Rockman will finally have a rival called Baroque...