As for me, I thought KH1FM's Sephiroth was harder, but I liked KH2FM's Sephiroth challenge better.
KH1FM Sephiroth felt more stat based and you are bound to get hit even if you have good reactions and you know his moveset. In that fight you need to use cure a lot to keep taking his hits, most of the time. Just look at lvl1 and no damage runs of him. In KH2 if you are good with timing dodges and blocks, you can avoid all damage unless you get trip up and make a mistake. In KH1, to not get hit, you have to stretch the battle for much longer since you do more of a hit and run tactic (which is mostly running instead of hitting).
For people who say KH2fm Sephiroth is easy: Yes, technically he's easier than KH1 Sephiroth, but it's still a tough fight. If you do not get really good at blocking, defending, timing your attacks, and having good reaction timing, you will get slaughtered. That fight rewards you for getting good at the game. But if you want a reward for Mastering the game, then's there's the fight with Lingering Will