infosoldier.com

After years of internal debate, Capcom has reached a consensus. I am imagining these men meeting in a smoky room, arguing for hours, wadded paper spilling from an overfilled trash bin, before finally hashing out this landmark piece of Street Fighter canon.
M. Bison’s (aka “Vega’s”) shadowy group that’s up to no good? Henceforth, it shall be known as Shadaloo. Not “Shadoloo.” Not “Shadowloo,” but simply Shadaloo. Looking back, it’s hard to imagine how we could have even considered those other ridiculous spellings. Let us go forward in unity with a single mind and single spelling.
For the record, according to googlefight, it also appears that “Shadaloo” is already the most popular spelling, but dissenting spellers can now be hunted down and killed with a clear conscience.
Also for the record, no I am not kidding–this is an official position statement from Capcom.  It really is Shadaloo or the highway.  Hugs.