"the sons of God saw that the daughters of men were fair; and they took to wife such of them as they chose."
-Genesis 6:2

"The Nephilim were on the earth in those days, and also afterward, when the sons of God came in to the daughters of men, and they bore children to them. These were the mighty men that were of old, the men of renown."
-Genesis 6:4

According to the bible, Nephilim were the children that resulted from the unions of human women and angels.  This is also the name of the mysterious Elly-lookalike girl.  Nephilim appears to live inside KOS-MOS, and this spirit may be surfacing when she has her "blue-eyes" episodes.  It would make sense that she is a part of KOS-MOS.  KOS-MOS was created by Kevin with Shion's help.  Kevin/chaos could be seen as the source of Nephilim's "angelic heritage."  And Shion thinks of KOS-MOS like a daughter.  (Also in Greek mythology, the ordered universe, or cosmos, was created out of chaos.  The meaning there should be clear.)

I also think Nephilim's origins through Kevin/chaos go beyond KOS-MOS.

As mentioned, Nephilim looks like Elly from Xenogears.  And Elly was the anti-type, which was the will of the wave existence given form by the contact.  In Xenogears, the first incarnation of the contact was Abel, and he wanted his mother, so the will took the form of his mother, Elly.  Obviously, Nephilim looks the most like Elly, but Shion and KOS-MOS both resemble her as well.  

Okay, here's a possible scenario.

It starts with Abel.  We know he's in the game because we see him, and Wilhelm mention's "Abel's Ark" at the end.  If you see a guy that looks like Abel, and someone mentions his name, you can put two and two together.  Also, I remember people saying that there was an official translated script of one of the trailers released once, and Abel was labeled "Abel."  So I'm assuming that kid with the blocks *is* Abel.

Maybe Abel was a normal kid to begin with, who knows.  But I think the presence of Nephilim means that he has already made contact with the Zohar.  After this happened, he was probably sealed up in some lab with the Zohar and experimented on. It's likely he first made contact with the Zohar as part of Mizrahi's experiments to reverse the Zohar's effects, to recover Lost Jerusalem. From the database:


link experiment
----------------
An experiment led by Cherenkov to activate the Zohar emulator.

The word "link" indicates that the procedure entails connecting the Zohar with another entity.


I think the other "entity" would be Abel. In the early Episode 1 trailers, there's a sequence where Abel is seen screaming, followed by a planet pulling the disappearing act. (And off-hand, doesn't chaos claim his talent is making things disappear?)

In Xenogears, Elly was formed by Deus' biological computer, Kadomony.  But I think it's different in Xenosaga.  What if this time, instead of coming directly from the machine the first time, Zohar instead caused her to be born normally, as she is throughout most the Xenogears history?  What if the anti-type was born to someone who worked close to the Zohar project and Abel?  To someone like the wife of Shion's father, who was close to the Zohar project?  Here's his database entry.


Shion's father
----------------------
A high ranking official in the Federation's Ministry of Energy, he serves as supervisor of special operations.  As to what exactly his job entailed, or what operations he was supervising, remains to be seen in the following episodes.


(Also note that when you read the sign in front of the Zohar-shaped building in Cathedral Ship, where the Zohar emulator was experimented on, it reads 'Department of Energy'.)

Shion's mother also suffered from some kind of mental illness, and was one of the subjects at Mizrahi's Acute Neurosis Treatment Facility.  It could be related to the fact that Shion wasn't a normal child that her mother had problems.  But either way, it was most likely during this time that Mizrahi realized what Shion was.  (During the game, Shion is hinted to be unusual, being able to survive the FAE blast, hearing the song of Nephilim, and exhibiting signs of psychic ability towards the end.)  Maybe Mizrahi experimented on Shion, and/or created new experiments based on what he learned about Shion.   These experiments might have led to early concepts for KOS-MOS, for whatever purpose.

Also around this time, Mizrahi would have had his mysterious assistant.  This assistant's true identity was probably known only to Mizrahi.  As stated in the chaos/Kevin theory, this would be chaos/Kevin.  But as someone working close with the Zohar and the Emulators, only Mizrahi might know that he was actually a creation of the contact's mind.

While the original boy Abel remained in the laboratory, his secondary persona created through his Zohar-powered will was Mizrahi's "assistant", and may have known Shion for a time as well.  To take it even a stretch further, his ability to be in more than one place at once could explain how he was attending Bormeo University at the same time. Remember when Albedo explains the "will to power" and manifests a cloak-like being over himself, saying that it is something that exists in everyone? If Albedo could manifest something like that, imagine what someone with the power of the Zohar (Abel) could manifest. I believe "chaos" is a manifestation of Abel's will. Abel may not be consciously aware of doing this, however.

In newly revealed Episode 2 screenshots (http://www.rpgfan.com/pics/xenosaga-episode2/index.html), chaos and an unknown redheaded realian (look at the yellow eyes, only realians have those) are wearing uniforms. They are also seen with Jin in uniform, who is fighting Margulis. And of course, Margulis is a U-TIC commander.

We know this is a flashback, because we see Margulis without a scar, then Jin slices his face up.

We know that Jin raised Shion quietly on Second Miltia after the Miltian Conflict, and has been living there since, reading his books. This means the flashback happened during the Miltian Conflict, before he took Shion away. Most likely the flashback is on Miltia itself.

Okay. I think Jin was with U-TIC, back when it was still under Mizrahi's control. He may have even been a U-TIC spy. This is where his rivalry with Margulis began. But after the Conflict and Mizrahi's death, he didn't like the new U-TIC, and decided to escape. It's likely he had sympathizers in two other U-TIC test pilots. "chaos" who would have been close to Mizrahi since he was his assistant (the new chaos design looks even *more* like the assistant than he did before!), and the redheaded realian. So Jin, the assistant, and redheaded realian escape Margulis and U-TIC, and then try to individually disappear.

After the Miltia Incident, Shion would be taken to Second Miltia by Jin.  Meanwhile, the assistant would have completely fled to Bormeo University under the guise of Kevin, only to be eventually found out by the U-TIC organization that knew about him. Most likely it was his work that caught their attention, and since only Mizrahi's assistant would know the things he knew, so it was probably simple for them to figure him out. But Kevin is a spiritual being, like Wilhelm probably is, and Abel's body remained behind on Miltia where time stands still due to the screwed up space anomalies caused by the Zohar and double black holes.

Under U-TIC's watch, Kevin was forced to continue with their plans, and set to creating KOS-MOS.  The black boxes she has suggests she may be powered by the Zohar, like the gears in Xenogears were.  Because of this, Nephilim, who is the form of the wave existence, inhabits KOS-MOS.  Being part of the contact, Kevin senses her presence within KOS-MOS, and this may be one of the reasons he decides against letting U-TIC have her for their purposes.  And of course, is also the reason he falls in love with Shion.

However, when Kevin is killed, Wilhelm tries to take control of him.  Wilhelm, being Wilhelm, probably knows what Kevin is.  But when Wilhelm couldn't take complete control of his soul, it was probably Nephilim who stepped in to help the chaos that resulted.

When chaos was "born," his memories of being on Miltia and being Abel were completely wiped out.  Only red cloak, who is mostly just Kevin's mind has those memories along with his knowledge of KOS-MOS that Wilhelm needs.  chaos' memories probably only go back to his time as "Kevin."  Nephilim, being able to predict possible future events knows that eventually Shion and KOS-MOS will end up on the Elsa during a crucial time.  So chaos first appears in the past, where he's able to hook up with the Elsa years ahead of time.  Being similar to the cloaked beings, chaos can probably cause space/time anomalies  (As Wilhelm mentions they can during the ending.) which makes it very possible for him to pull-off something like this.  And after all, time probably doesn't exist the same way after death, so there's nothing that says he would have to be reborn somewhere on the linear timeline.

What chaos' mission is, or what all he really knows is up in the air.  But he knows what Shion and KOS-MOS are, even if he doesn't seem to be sure what to do about it.  KOS-MOS' creation was probably related to some U-TIC plot,  the Federation wants her for their Zohar project, and Wilhelm seems to be interested in Shion for reasons of his own.  chaos is probably taking some direction from Nephilim as to what's going on, and all the different outcomes to all those faction plots are most likely not anything he's happy with.  At the same time, he's probably being guided in a direction that may be for the most good, but may involve destroying either Shion or KOS-MOS to succeed, and again he isn't happy with it.  Thus, "what will you do?"

Ultimately, I think it'll all come together when they finally return to Miltia and reach the Zohar.   Shion and KOS-MOS will merge to become the awakened anti-type.  When this happens, and when they find Abel, then chaos will finally regain his memories and his real body.  Who they'll be after that happens is anyone's guess.

I know it's a farflung theory.  But consider that the main characters in the Xenoverse are the contact and the anti-type.  Neither of which *seems* to have appeared yet.  This is my prediction concerning those two.

One possible, big hint towards this is during the ending.  When KOS-MOS goes out to shield the Elsa, chaos appears to lend her some of his power.  The sequence is as follows:  chaos' hands glow.  We see Nephilim standing in a graveyard.  Then we see Abel looking up.  Next we see Wilhelm, watching it all happening in his Compass of Order.  Okay, that's an interesting series of images.  Why do they show Abel and Nephilim while chaos and KOS-MOS are merging their powers?  Why is the Compass of Order going all wacky, and Wilhelm taking such an interest in this?  I think this is a very big hint.

And while we're here, yes,  I do think chaos and KOS-MOS merge during that scene.

I think the song "Pain" may be describing part of what happens at the end with chaos and KOS-MOS.  Albedo says pain and perception are the same, which means pain might equal true consciousness, or a soul.  That's why KOS-MOS may ask if pain is what she needs to be complete, a real soul.  (Which she may not gain until she becomes one with Shion.  As she is, she is incomplete.)

At the end, she asks for chaos' pain, somehow knowing he can do it.  Maybe pure soul energy is what activates her most powerful abilities.  We see this when she sucks up gnosis (which may be human souls) to use X-Buster.  And she has black boxes, which may be Zohar slave generators (again, like gears used in Xenogears), that draw from the wave existence energy.  (pleroma?)  It appears that chaos fuses with KOS-MOS at the end, and by joining with her, gives her his pain and soul energy to activate the big shield that saves the Elsa.

Look at the "Pain" lyrics.

First we touch, and we hurt each other
Then we tear our hearts apart
We are too close and I can feel the pain
Fill my empty heart

By giving KOS-MOS his pain, chaos would be hurting her, and bringing forth his pain would hurt him as well.  

You can tell chaos has merged with her, because her face changes to look like his.  It's certainly within his power, since he's very gnosis-like in his abilities.  And we've seen that gnosis can merge with other objects.  During the Woglinde attack, we see a gnosis merge with an A.G.W.S.  And in Proto Merkaba, the final boss is a gnosis merged with a reactor.  The fact that a powerful ability is unlocked by this merging suggests that she might have been built with this function in mind.  And that chaos knows how to do this once again suggests a knowledge of her workings that only her creator would know.

Then there's the "Nisan angels" connection.  KOS-MOS and chaos both grow wings, and as far as I know, the only ones with "winged" official artwork.  In Xenogears, the Nisan angels were two angels, male and female, with only one wing each.  According to the legend, these angels needed each other to fly.  This sounds a lot like what happens with KOS-MOS and chaos.  And in the end, these angels also represented Fei and Elly, which again presents contact and anti-type connections.  KOS-MOS and chaos are going to be in all six episodes, which are supposed to span over thousands of years.  Again, this could suggest their importance to the overall storyline.

Finally, there's recently been this interview with the developers.
http://www.gamepro.com/sony/ps2/games/news/29564.shtml

It's stated that "we likely won't be dealing with the exact same KOS-MOS for the whole story", which would make sense if she were to eventually merge with Shion.  And "the true form of chaos" is also mentioned, which certainly suggests another identity.