Oh right, speaking of Sora... I can't be the only one who is bothered by the fact that Terra hasn't appeared in KH and there is a dude named Terra in the games, right?
The reason Terra (and many other FF characters) doesn't appear in KH likely has to do with the fact that Nomura, the man behind KH as a whole, didn't have a hand in creating her. The only character who appears in the series that wasn't created by him was Vivi (and only because the team begged him to put him in) and he doesn't seem to like to work with FF characters he didn't have a hand in creating on (either because he is unfamiliar with the characters and doesn't want to mess them up or because he is biased towards his own creations)
Setzer actually originates from an unused concept from a Gambler Class in FF5, alongside a "Ninja and Dog" Class (the Ninja was used but the Dog wasn't) and those concepts were used for FF6's Setzer and Shadow respectively. Nomura did have a hand on creating these 2, which is why Setzer appears in Kingdom Hearts 2. Nomura wasn't that much involved regarding creating main characters before FF7, as he was mostly in charge of designing the enemies and monsters, and characters like Setzer were the exception.
Also, the reason Terra from KH is named Terra is because of theming, as Terra means "Earth" in Latin, and he is friends with Aqua ("Water" in Latin) and Ventus ("Wind" in Latin), which parallels Riku ("Land" in Japanese) Kairi ("Sea" in Japanese) and Sora ("Sky" in Japanese)
Terra Branford in Japan is named
Tina Branford, but it was likely changed to Terra since Tina is a very common name in the west, and the reason she was called Tina in the first place was because it sounded different and special (Tina is a forgein name to Japanese people, so it's gonna stick out) so they changed to something more exotic to western audiences (this is in line with Woolseyism, the idea of stuff getting changed during translation to work better in the new language, and FF6 is one of the biggest examples of this as a whole)
EDIT:
'd.