French BigBen interactive offers the Bodypad that comes with a set of sensors to interact specifically with fight games like Tekken. The system comes with 2 elbow-sensors, 2 knee sensors, 2 handles, belt clip and a receiver box. The Bodypad works with the PS2 where it supports a ton of games and also with the Xbox, but the number of supported games is much lower. The Bodypad sells for about 50 Euros in Europe.
More details and demo videos on BigBen Bodypad site.
I have reported about Xavix from the CES 2005 which offers input devices that go in a similar direction. The Bodypad seems to be the most advanced though for virtual fighting.
The BODYPAD is fully compatiblewith Tekken™, Deador Alive™, Soul Calibur™, MortalKombat™, Dragon Ball Z™, Bloody Roar™, StreetFighter™, VirtuaFighter™, Athens 2004™ and many more.