I find it amusing that no one has pointed out the fact that Vader is commander of the entire Galactic Military. Never mind the Death Star, and why draw a lightsaber when you have millions of expendable troops to throw at your opponent? Even if they don't kill him, they will give Vader a number of distinct tactical advantages:
1. Waves and waves of enemies should, at least, wear Sephiroth down if not kill him outright - after all, he's been beaten by a pitiful little emo twit once, and a little boy brandishing an oversized key - that's not compensating for anything, mind you - twice.
2. With probe droids on the sidelines, Vader can observe Sephiroth's tactics to develop the most effective means to attack him in personal combat, should the need arise. Remember, Vader was once a general in the Clone Wars, and cybernetic body or not, he still retains that experience. Besides, he's already experienced the consequences of blindly charging in several times in his life.
As far as Sephiroth's magic, let's see:
Fire - Vader survived being immolated on Mustafar - with only one arm left. And he's wearing armor that's designed to give limited protection against lightsaber blades - y'know, the ones that can cut through heavy blast doors in a matter of a few moments? Fire shouldn't be that big an issue.
Bolt - Vader holds up his lightsaber for a moment, absorbing the bolt. "I'm sorry; you were saying something funny, Sephiroth?" (Or his hands - he blocked blaster bolts with his hands, after all.)
Ice - His suit is also armor, as previously mentioned, and for one who spends a great deal of time in space, protection from the extreme cold of space would be vital - mere ice would be meaningless.
Water - Granted, Vader is more machine than man, and we all know that water and electricity don't mix, but c'mon... they have the technology to build a mobile iron lung. I'm pretty sure it's waterproof.
Bio - It's well established that the Force, Light and Dark sides, can heal the body, and neutralize toxins.
Gravity - This might have an effect on Vader, provided he doesn't have some JRPG immunity (which would need to be considered for all the various magics, anyway), but it hardly matters much when he can lift Sephiroth off the ground and pin him to a wall 20 meters away - aw, too bad Sephiroth... you're sword's only 19.5 meters long - also not compensating for anything, I suppose - you can't reach Vader while he uses the Force to pummel you to death with everything in the room that isn't nailed down... and everything that is nailed down come to think of it.
Meteor - After Vader waits 3 months for the meteor to finally arrive, he holds one hand up, meteor stops in midair, and Vader simply says "Why didn't you say you wanted to play catch?"
Status effects: as his position would undoubtedly grant him "boss" status, he'll be immune to all status ailments anyway.
Don't get me wrong, I like both characters a great deal, and Sephiroth does kick a prodigious amount of ass. I just feel that Vader's got several distinct advantages. Yes, the both have mommy issues, but as was previously mentioned, Vader got over his.