Wish I'd had Command Counter.
I think first off, having your counter-attack tank equipped with a Mystile is a bad idea. If Combo misses I'm fairly sure there's no counter-attack made, and you want to be hitting him at least once per hit. Replace it with the Imperial Guard; it has 0MEvasion and the tank can't afford to miss healing. If the damage is too high, then consider the Ziedrich. The tank will also be dealing with Paralysis and Dual Drain so they have to be protected, as Paralysis will prevent them from doing their job and Dual Drain needs to be kept off them for high HP.
So here's what to do; set Cloud up like this:
Ragnarok (it has a great Vit/Spr bonus)
Imperial Guard
Ribbon
And give him this:
All the Counter Attack
Command Counter + Steal (but only if it has Mug; otherwise, use the unreliable Deathblow)
Long Range, Cover, HP Plus, etc.
If Imperial Guard: Added Effect + Destruct OR Time (Recommend Time; he needs to be active to Cover in case Stop gets through).
He'll be hitting for 1500-2000 damage for each time he gets smacked with Combo (the fourth hit of Combo can't be covered unfortunately) so that's a reliable 6000 damage + whatever the low level counters add on. The tank should Defend for the entire fight, as this reduces physical damage by 50% and stacks with all other forms of damage reduction like Sadness (it can be used during Combo to make the subsequent hits deal less too). It also has them on stand-by to use items in an emergency. You could add on Magic Counter with Comet (or healing) but slots will be too tight if you're using the Ziedrich.
So you're dealing more damage than Absorb (provided you don't attack physically and I'd recommend against it unless it's Meteorain). That means you can turtle him. Basically, you devote every turn to healing damage or statuses. It's slow, but it'll do the job as Lifeform's arsenal of attacks are fairly limited. The only problem left is MP, Stop, and Death Sentence.
You've figured it out, but Magic Breath is king for MP restoration. But if memory serves, Reflect bounces it away. I think items have to take the hit here (but watch out as Elixirs can and will be Covered by your tank unless used on him or by him) but you could maybe try applying Resist either through the spell or the Vaccine (if you have a lot of them) and then re-applying it when Absorb hits someone. That would take care of Stop and Death Sentence, and let you keep using Magic Breath for MP. If the tank doesn't require MP then that can cut down on the cost of Vaccines/Resist.
But yeah, turtle him. Only damage from counter attacks, use every turn for healing. The tank should use Defend and then sit with a turn ready to use an item if something goes wrong. Resist can prevent Stop (and Death I think), but if worst comes to worst then consider using Active ATB on full speed. It makes Death Sentence worse, but it makes Stop (and Paralysis) much less dangerous as it'll wear off after 2-3 turns (I think, depends what attacks he uses).
Dunno if you've seen this, but it's basically this strategy but don't use Comet2 at the end (made things faster but riskier):
http://www.youtube.com/watch?v=6KWx58F86W8&feature=share&list=PLHycnnWEuVLzv55BKJ88g3h75qmuyU_gJ&index=54Sorry if I've missed an important mechanic or forgot something like the way Resist or Ribbons work, it's been a while since I fought the guy.
