This section was changed to be a lot tougher in DKS. In D2:ED I could just sit in place spamming fireballs, being attacked but not take any damage (wasn't that much higher in level), but in DKS had to leave it until a higher level (killed Zagan in the low 20s, but couldn't clear the rest of the cave, so reloaded rather than skip them, since you can not return there).
I killed Zagan without needing to fly to the exit to transform, but using hit and run tactics there was the only way I could clear the rest of the cave (
Zagan tips).
The sound and Zagan's attack doing that much damage was likely a bug, though. There is a known issue where bosses can have a fast, overpowered attack (
Ba'al. The Impossible foe?). Most commonly it happens with Ba'al, Laiken or the flying fortress generals, but IIRC it has happened with Zagan once or twice.