Okay, so, it looks like the format changed between S01 and S02, whereas S02 is when Video Power became a game show. Your memory suggests it is more likely that it was during S02 when this incident would have occurred.
There are actually 2 co-hosts in this format:
- A host who works the crowd, named Terry.
- A gaming guru called "Johnny Arcade".
While Johnny does interact with the 4 chosen contestants, only Terry interacts directly with the crowd. So per your memory, it is likely Terry that had the interaction.
Each episode has a very specific format, where Terry only interacts with the crowd when he's finding 4 contestants. This segment happens following the first commercial break. After that first break Johnny gives some video game tips, and then Terry performs the "Johnny on the Spot" bit where he asks questions of 4 people from the crowd, who will then become contestants.
I took the time to review every episode of S02, paying particular attention to the above segment. While there were a fair handful of cringy moments, I was unable to locate an interaction like you described. I did however find this particularly cringe moment, where Terry plays with a girls hair.
During the course of S02, only a few episodes resulted in female contestants being picked from the crowd. These particular episodes I skimmed through in entirety, to see if the interaction was in a later segment and the host involved was Johnny Arcade. While again there were plenty of moments of awkwardness, I was unable to find the interaction you remember.
In conclusion, while I cannot say without a doubt that your memory is incorrect, I don't believe it occurred during S02.
EDIT: Apparently S02 had 35 episodes, but I was only able to find 19 unique episodes that were archived. So I only reviewed a little over half of the season. It's still entirely possible it happened in one of those lost episodes.
EDIT 2: I was able to track down and review 6 more episodes, for a total of 25 of 35. Still nothing, and I think I hit the end of the line. Verdict is: inconclusive. Sorry!