Walkthrough
After obtaining Kubfu, Mustard will suggest growing in strength and friendship with it. Believe it or not, you actually don't have to do any battling with Kubfu if you don't want to. Actually, all you must do is sight see with Kubfu, with each location marked on your town map. There are four different locations Mustard will mark on your Town Map, with a Dojo Student in each of those locations. By talking with each of these four students, you will take in the scenic views of that given area with Kubfu.
After going to all four locations, head back to Mustard at the Master Dojo. He will see that you are now friends with Kubfu, and he will allow you to proceed to challenging one of the Tower of Two Fists. You will only be able to challenge one of the towers, either the Tower of Waters or Tower of Darkness, and the one you choose will determine the form Kubfu will evolve into. Each Tower will require Kubfu to be at Level 70 in order for you to challenge it.