There were a LOT of rumors going around my school back in the day, most of them were video game related.
Some of my favorite schoolyard rumors from back in the day were popular around the time Grand Theft Auto III first came out on the PS2.
GTA III was extremely popular in my class and we even had our own weird rumors and stories about that game, sort of like the different myths in San Andreas like Bigfoot and UFO's, but a lot more localized.
One rumor was about how there was a secret seven star wanted level that you could only unlock after you beat all the missions in the game or entered a secret cheat code. Most of the variations of this myth usually involved superheroes or video game characters, with Spider-Man, the X-Men, and Solid Snake being the ones I remember hearing about the most.
One of the things we liked to do the most was wildly speculate on what the next GTA game was going to be like and since this was after GTA III but before Vice City, we assumed it would called Grand Theft Auto IV.
Probably my favorite rumor was about how the next Grand Theft Auto game was going to take place during the Middle Ages and you would steal horses and donkeys instead of cars and use swords, bows, and spears instead of guns. A similar schoolyard rumor was that GTA 4 was going to take place in the Old West and this one sort of came true in a roundabout way thanks to Red Dead Redemption.
There was one rumor I remember that was one of those "Kid whose uncle works at Nintendo" stories, but we all had to admit it was kind of cool. Basically, the idea was that the next GTA game would take place in the Digital World and include both human characters and Digimon.
Of course, we all heard stories about how the girls in Dead or Alive 2 could fight naked if you managed to beat Story Mode with every female character under a certain amount of time.
Similar stories circulated about nude costumes for Resident Evil and of course, Tomb Raider.
I also heard stories about how they were going to release some sort of AO-rated game for the PS2 and it all sounded really awesome for some reason. I don't remember too much of the details other than it was going to be some sort of edgy horror game or something.
Again, another one of those wild daydream rumors that was totally bogus because none of us ever saw an AO-rated game but we read about the rating in magazines. Of course, we didn't know that retailers and console makers refuse to carry AO games.