That's One Winged Angel, the keyblade you get for beating Sephiroth.
It's got 8 atk -3 mg but +12 Criticals (it's only rivaled by La Vi En Rose/Divine Rose).
And yeah Xemnas will own the fuck out of Donald and Goofy, truth be told I was trying to get them killed so they wouldn't screw up my loop. I do believe your theory is right as well, it's just a way to test Sora as far as Roxas' capabilities are concerned.
He beat MF with Aqua I think?
He hasn't beaten it with Terra or Ven.
I have No Name with all 3 characters so it could be any one of the 3 (I also have Ultima with Terra and Aqua and about to get it with Ventus) so...
Probably Aqua or Terra