After the Crash...
Evil Otto realised that, one day, it would be forgotten. It couldn't haunt the nightmares of nerds anywhere, so it took a different form to evoke horror among gamers. That form is Pyramid Head.Alternatively...
In the 'Rose Bowl' episode of NewsRadio, Bill resentfully refers to Dave as "Evil Otto". Maybe Otto evolved into human form...... Retaining his cute little face, obviously...Turbo helped him escape.
In exchange for freeing Evil Otto from Berzerk (or Frenzy), Turbo was given the "cheat sheet" written on the Tapper's napkin.Evil Otto is an Evil Knockoff of Pac-Man
Yes, different companies, but think about it! Not only do they look similar, but Ms Pac Man was originally a game called Crazy Otto!