Nothing abnormal about it. Hello Kitty brand was always popular but perhaps it was more popular around that time. So it was a thing that when some boys owned a Hello Kitty brand school bag, pencil or something people would make fun of them lol. So this is why Butters, a kid symbolises the generic weird kid in any school who would even publicly announce he likes Hello Kitty stuff without any shame by not caring how he commits social suicide in everything he does would had to mention he likes a Hello Kitty game instead. And this is a reference and is about how hobbies were divided by gender back then. Comparing last 2 decades, back then people especially liked rubbish video games just because you gotta like them if you are "a boy". That's why people liked DOOM and football in a very crazy way because you had to prove you are not homosexual or "girly" boi lol. As a result relatively stuff that's not "testosterone over 9000" was ignored. Things was weird in a way boys could make fun of girls for even riding a bike due to mentality of "bikes are for boys". So around that time only BS that make sense is "Hello Kitty is only for girls" mentality.
As for the naming of the game, if they can used Hello Kitty name then they had permission. So the company owns Hello Kitty brand is aware of they would say "Hello Kitty Island Adventure", and TBH to not ruin company and its brands' name it would be usual for Hello Kitty company to actually choose what kind of name of the game the character has to say, thus they can use it for future advertizement and use its popularity to sell the game. It was just people expected a Hello Kitty Island Adventure game because it was a clear "advertizing of a possible upcoming game" and it has the most generic name possible so eventually you would expect a Hello Kitty game released having that very same name so it could drop "soon" but it only released long time later. Not to mention Hello Kitty company probably specifically paid money to South Park's developers to use this situation for advertizement too as it was an usual thing too. But then gotta mention about something like Hello Kitty to make the theme of the episode get better lol.
Then why it took that long for the game to drop?: It may be due to many reasons like Nintendo and Kirby's popularity. Nintendo may paid money to Hello Kitty company to never release a game or "intentionally don't release a decent game" that would steal the thunder of Kirby when they wanted to profit via Kirby brand. Nintendo is a legal mafia after all lol. However Nintendo may didn't do anything about it but Hello Kitty company would wait for a "right moment" to release the game as it's how companies operate. A game idea may be developed in concept phase but just because society is not right for it they put the concept into shelf until society would like that games' idea. Sometimes trend shift make companies cancel a game. So after the games' name mentioned in a popular show people would wanna play it, and then to don't waste that popularity you gotta do a lot to release a satisfying game that even boys would wanna play or something. Perhaps that's why they waited for long time so society would shift into a way boys now would be okay playing a Hello Kitty game lol.
Another thing is during COVID society liked cozy games so even grown ass men who usually doesn't play video games even enjoyed Animal Crossing. Meme culture exploded more too. So it would be good idea to release this Hello Kitty game recently. So a Hello Kitty game with that specific name had to be released in the perfect time to maximize profit. It was a gold mine that would be shame to waste it. It wouldn't sell much despite South Park's popularity back then.
