I found KH2 Sephy a lot easier than the KH1 Sephy. I beat KH2 Sephy at Level 43 on the Japanese KH2 when it first came out.
The key to victory is mainly playing defensive and afar, then attacking when you have an opening (I found Berserker very bad against him personally, I like my finishers)
Issen Flash is a good move to counter, it's simple to spot and counter too, just press Triangle. Though note - You cannot counter Issen Flash unless you are on the ground.
After he does a ground combo, you can get at him.
If he tries to hit you in the air, let him, then use Revenge Slash, followed by a combo.
Heartless Angel is annoying, but easy to spot, and easy to judge (eventually) if you can stop it or accept it and time a healing item to it.
He always follows Heartless Angel with Issen Flash.
It's generally a case of getting used to his moves.
And though I didn't use it myself, Reflect is apparently very useful against him, as well as Trinity Limit.
Finally, make sure you have a Keyblade with enough "reach" (though it's not mentioned in the game)
Ultima Weapon
Oblivion
Decisive Pumpkin
Guardian Soul
They are the best to use. Ultima Weapon is obviously the best, for it's MP Hastega....
Now, Terra, there's a tough KH opponent....