A slot for a second act was also found at this point of development, but that had even less work done, as it was a copy of the first act with an empty object layout. Only a small part of the level was actually finished, as it cuts off after a certain point. When the Simon Wai prototype was eventually leaked, a much more playable (but still obviously incomplete) version of Hidden Palace Zone was made available for the first time. However, the Zone was overwritten with a vaguely-defined Oil Ocean object list, as the player falls to their doom when the Zone is accessed.

It was eventually discovered that players can still access a garbled version of it with a cheat device, confirming that the unused music track was intended for this Zone in some late form.

When Sonic the Hedgehog 3 was released, the level icon for Hidden Palace was spotted in the standalone Sound Test option (as it was directly built off the prequel's engine), suggesting that remnants of Hidden Palace still existed in the game data of Sonic the Hedgehog 2. Players first noticed a somber music track listed as 'Sound Test 10' that did not play anywhere else in the game, leading some to wonder if it was related to the elusive Zone that was exposed in preview images. Sonic & All-Stars Racing Transformed Review In ICEknight's interview with the level artist, Craig Stitt, he expressed dissatisfaction with the decision to remove the Zone just a few days before the game was declared complete. Hidden Palace Zone was one of five Zones that were removed from the game, with Yuji Naka claiming that one of them was fully completed before being removed in the very last minute due to memory limitations. However, it was then changed to one act before the developers eventually scrapped the proposal and instead, the player would access Super Sonic regardless of which Zone he is in. Hidden Palace Zone was intended to be a two-act stage and the Zone where Sonic would convert to Super Sonic after collecting all seven Chaos Emeralds. A promotional VHS from Spanish gaming magazine Super Juegos from October 1992 also features gameplay footage of Hidden Palace Zone from the later prototype. These are some of the same characteristics seen in other promotional mock-up pictures sent out by Sega during the same time frame. It was determined not to be a screenshot from a prototype for several reasons: Sonic's sprite is different than any of those seen in earlier versions of Sonic the Hedgehog 2, Sonic is off-center, he is running in mid air, the use of background is different, the placement of two enemies at the bottom is off, the HUD is not italicized, etc. For years, this is the most that players had seen of the level. Early mock-up image of Hidden Palace Zone was sent to various magazines to promote Sonic the Hedgehog 2.

Sonic 1 boss sprites