Sephiroth is quite honestly the last possible thing you can do ingame (Minus perhaps the Phantom and Arabian Warrior thing). Strike Raid is an absolute must and all of your damage should be coming from counter hits. If you attack out of these set of rules you are doomed. Elixers are a definite must as well should he be able to cast Sin Heartless Angel (Instant death unless you have the Second Chance ability equipped)Screw it. As soon as I get the money I'm getting it, I actually remember liking that part.
Heck, I remember fighting Sephiroth without much issue. Then again, I didn't understand much of the games mechanics so that might've helped. Isn't it true that he's a lot like the player in terms of potential?