Sephiroth's Attacks

Basic Sword Slash
Sephiroth does a basic standing sword slash. His sword has the ability to reach you at far distance. If you're good, try parrying it. Using Aero is recommended.

Teleport Sword Slash
Sephiroth does a teleport somewhere around you (generally behind you) and then follows with a sword slash. Damage is about the same as a Basic Sword Slash. He'll also do almost every time after you land a combo, sometimes interrupting your combo. Try rolling your way though.

Flame Pillar
Sephiroth summons a huge pillar of flame to surround him. He is not invincible while he does this, so take advantage of it.

Sin Harvest
Sephiroth teleports into a corner and summons some nasty voodoo against you. This move will hurt! Do not let it hit you! It will reduce your HPs to 1, and your MPs to 0. It will kill you outright if you don't have Second Chance. After he does this, he will normally do a Teleport Sword Slash and try and kill you. If you interrupt this move (by hitting him), he'll immediately go into a Flame Pillar. Quickly use a potion or something to heal your life.

Omnislash
Sephiroth does a frenzy of standing and leaping blows, then leaps up and does a finisher. This will hurt very much, but I've noticed the hits don't stun, so you can dodge roll away and Cure in the middle of his tantrum if you want. Just be wary of the last blow, because it takes a chunk of life. After he's done, he's winded for a second, so get a few hits in.

Darkness Ball Attack
Sephiroth summons 5-8 Darkness Balls that surround him, then he closes in on you, and does as Basic Sword Slash as the Darkness Balls draw in close to you. He will also do a Teleport Sword Slash here as well, if you dodged the Darkness Balls and his Basic Sword Slash. Doesn't really do a whole lot of damage, but it can keep you stunned if you get hit by a lot of them. I basically mashed Cure here, and waited for an opening to hit him.

Meteor Shower
Sephiroth turns white and summons a bunch of meteors. They circle around him slowly, causing you damage if you get hit. Then the meteors get sucked into a black hole over his head, then a huge meteor from the black hole hits you. He's invincible while he's doing this, so just try and stay away, and cure as needed.

Rewards

After you defeat him, you'll gain a great amount of exp, 18,000 to be exact. That all. You won't see anything else. Try defeating him till your level 100 its fast indeed.

Quote from the journal entry

"Once known as the greatest of swordsmen, his wehereabouts have been unkown for some time. He challenged Sora to a on-on-one duel. No one knows why he has suddenly returned. Apparently, he and Cloud have crossed paths before."