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This is the Kingdom Hearts help thread, not the Kingdom Hearts 2 one.
To beat Sephiroth, be about level 60 (if you are playing on Expert mode) and have Curaga on your quick box as the X button.
Needed Abilities: MP Rage, Strike Raid
Start the battle by jumping straight towards him. Lock on and unleash a combo. He'll fly away. Lock On to him and unleash a Strike Raid. Unleash as many fo these as you can until you MP disallows it. Run up to Sephy and let him take a few hits at you. This will recover most of your MP (if you're at a low level) and allow you to continue the Strike Raid barrage and heal.
When he starts teleport like a madman, doge roll. That is the easiest way to dodge this attack. Quickly do a dodge roll when he teleports and his sword will go right over your head.
On about his 4th or 5th teleport, he won't attack, but go (usually) to the other side of the battlefield. LOCK ON! This is when he is using the fabled Send Heartless Angel move. It puts your HP to 1 and MP to 0. The only way to stop this attack is to bash Sephy while he is casting it. Simple enough, cast another Strike Raid and you'll be fine.
The rest of the battle is basically a repeat. When he summons the large dark orbs, you can jump to avoid them. Continue to attack Sephiroth and you shoudl defeat him without fail.
Two more moves to look out for:
Meteor - Sephiroth will glow with dark energy and warp to the middle of the field. Meteors will be summoned in a cirular pattern around him. They will start spinning and crashing into Sora. To dodge them, you can either hug the arena wall or try and jump around them, and this is not advised.
Beserk - In this attack, Sephiroth shoots up into the air and goes beserk with his sword, unleashes an unstopabble amount of sword slashes. Two strategies tot ake ont his move are:
1) Stand there casting Curaga, using MP Haste to get tons of MP back as you are hit.
2) Jab Square and use Guard to deflect his attacks.
I advise using strategy 1, but 2 does look a lot cooler.
I recomend that you have the glide ability to dodge his meteor attack. Also go in with Ultima Weapon and ALOT of elixirs. Lastly when he glows red and floats in one place YOU NEED to HIT him before he finishes his spell or else your HP and MP will go down to ZERO. Good luck.