You can totally kill him, you just have to be smart about it. First, use a buff spell from Shadowheart on the team, then get her to the high ground and use her spells to plink away. With your Melee characters, use your special weapon powers, some of them daze or bleed him, both of which are helpful. Even when you hit, you aren't going to do much damage, your real goal is to just keep him off balance enough that the mindflayer can do the real damage.
For a sneaky way to win with a strong main character, you can carry an explosive goo barrel from earlier in the stage and set it down next to him, two if you are really strong. Then disengage, walk back to the fire at the beginning of the room. On the next turn dip your arrows into the fire and shoot the barrels. That does some hardcore damage, but I would only do that if he is down to 25% of his health or so, because you are going to kill the mindflayer doing it that as well, and you need time to grab the devil's sword before running to the panel.
You can just collect them at the enterance way and then after defeating the initial enemies move them up by dragging them rather than using inventory (I found inventory a bit buggy). I usually use / sacrifice Us to stand next to them and draw the 2 devils that spawn then impressive kaboom for the cheesy win.
For a less-cheesy win buffing the mindflayer and debuffing the devils (spamming vicious mockery is particularly effective) until they are all nearly dead is the easiest route.
