It's so simple to do.
When you start GM select "New" and when it shows you the Smackdown/Raw screen have two controllers and you pick the show you want and then grab the other controller and select the other show. Note: If you want the legends and your Created Wrestlers press "Start" at the Smackdown/Raw select screen and press square on the wrestlers that you want in and out of the GM. Next Pick the wrestler you want and grab the other controller and have the other show pick crappy wrestlers. A good thing to do is have player 2 select really good wrestlers and put them on "Long" contracts and then have you pick a created wrestler (because they only cost 50,000$ for 5 weeks) and then trade it back when you done with your roster. If you trade a wrestler you can trade a 1 for 3 trade meaning 1crappy wrestler from your roster for 3 really good wrestlers from thier roster.
It gives you the best roster and a 100% chance for the GM of the year trophy.
Have fun getting the "Perfect" Roster, because I have a great one. I have all the Hogans, Andrea, Stone Cold, The Rock, Kurt Angle, RVD, John Cena, Rey Mysterio, DX (just Tripple H and Shawn Michels), Mankind, Undertaker, Kane, and all the other really good wrestlers.

Ok, it's little complicated so pay attention.
Step 1: When you are asked to Draft Roster or use a preset WWE Roster, press start and turn off the superstars you want on your roster, that way your rival GM cannot select them.
Step 2:Choose your show.
Step 3: Sign the superstars that are left. Each to 5 Week contracts
Step 4: Before your first show, go to Free Agency and turn ON any superstar you want on your team.
Step 5: Go through your first show with the mediocre superstars you have.
Step 6: After the first show, release everyone you don't want and sign all the new people to 5 week contracts. (FOCUS ON THE MOST POPULAR LEGENDS)
Step 7: Run the Advertising Promo for 3 weeks to make your lost money back (use both PROMO slots)
Step 8: Once you have enough money and your newly aquiered superstars contrcts are down to ONE WEEK, sign them for THREE MONTHS.
Step 9: Go crazy. Make your matches according to how you want.

Try to build this roster:
SmackDown!
Hulk Hogan
Hollywood Hogan
Hogan 80's
Stone Cold
The Rock
Andre The Giant
John Cena
Triple H
Rey Mysterio
Christian
Shawn Michaels
RVD
Chavo Guererro
Eddie Gurrerro
Undertaker
Kane
JBL
Kurt Angle
2 CAW's of your choice

RAW
All of the above
Swap Cruiserweghts for divas (use 4 Divas)
Shawn Michaels
Rey Mysterio
2 CAW's of your choice