Plot hole: When Mr. Ballentine is telling Emily about her assignment, he sets the blue folder down near his side of the desk before he gets up. Then we see Emily pull it across the table and quickly peek in it. When Ballentine turns around, the folder is still close to Emily, which shows that she at least tried to look in it, yet Ballentine says nothing about it no longer being in the spot where he set it down. If Emily thought that it was okay for her to look in the folder, she wouldn't have waited for Ballentine to turn around before she touched it.
Plot hole: About three and a half minutes into the episode, Kyle looks through the photo album and sees a picture of his fake mother (the woman paid to pretend to be his mother) giving him a dog for Christmas. Two minutes later in a different scene, the paid parents claim in front of everyone that they're both allergic and had no pets. So by now it's obvious they're lying. Another two minutes later in another scene, Kyle's foster parents are looking through that same album and nobody ever notices the inconsistency.
Answer: He just "created" her.
Paul Brannon