OK, gonna Try to clear things up:
First of all, if you havent seen the optional zack movie and the optional Lucrecia movie, LOOK IT UP IN A FAQ, bc you'll never understand.
ok:
Cloud and tifa are born and live beside each other in Nibelheim, and either a few years b4 or after, Zack is born in Gongaga. Cloud, is umm, how do I say it, "weird" to the three-some that tifa hangs out with, so cloud thinks he is different and considers them all immature (except for Tifa bc he has a crush on her) During this Time, Tifa barely knows he exist. Ok, here we go that starts the real story:
Tifa mother dies and Tifa runs up Mt. Nibel, where her friends chickin out, so cloud follows her and they both fall and tifa is gravely injured while cloud gets away with skinned knees. Cloud is blamed for takin Tifa up there and is Ashamed of his weakness to save her. So Cloud starts to get into fights and gradually becomes an EXCEPTIONAL fighter (counters the theory of him being completely weak). As time goes on, him and tifa become good friends and Cloud calls her to the well, and tells her hes going to go join soldier to be like Sephy so he can impress her, so Cloud leaves for Midgar.
MIDGAR:
Cloud makes to midgar and joins shinra's army and meets Zack there as well. (at some time while trying to join soldier) Cloud is recognize as an exceptional fighter and tries to do what he came for: join soldier. But unfortunetely for cloud, he fails the mako showers and the small dosage of jenova cells bc his body rejects it and is forced to stay in the shinra army ranks. At this time, Zack makes it to 1st class Soldier. (obviously he passed the Jenova and mako showers)
ashamed for his failure, cloud never writes back to nibelheim where Tifa worries about him everyday, causing her love to grow over-time.
NIbelHeim: There is a mission where Sephy and Zack must investigate why monsters are coming from the reactor. Cloud another soldier is chosen to go with them. While at NibelHeim, Tifa hears some soldiers are coming and she happily choses to be the guide for which she hopes to see cloud. But to her dissapointment Cloud never shows up. The reason is, he is to ashamed to let the people know that he failed so he doesnt reveal himself to anyone there.
phew, I'm tired already, but I'll try to continue:
Ok, so they all travel to the Mt.Nibel reactor. (Zack, Sephy, Tifa, and the two soldiers (which one is cloud)) and they make it. Cloud is ordered to guard Tifa from entering the reactor. OK, so in there, Zack and sephy discover that HoJo is making monsters by OVERshowering soldiers, which is where Sephy goes berserk and runs to the mansion. So, everyone heads back towards the mansion after him to see whats wrong.Zack finds Sepyh who just discovers that he was created with Jenova cells within him. So Sephy starts declaring her Mother and burns Nibelheim calling all Humans Traitos BC he thinks Jenova is a cetra. so Zack, Tifa, Tifa's father, and Cloud (still under uniform) chase after him towards the reactor where Sephy is heading to reclaim his "Mother". Tifa's father gets there first and is killed by sephy. Tifa appears next and attacks him and is cut deeply. Next, Zack comes and fights sephy and loses and is knock almost unconsious. Last, Cloud shows up, looks at the situation, and takes Zack's 2000000 ft long buster sword and stabs sephy in the back while sephy is taking jenova. This injury was very deep only allowing Sephy to take Jenova's head bc of the injury. Cloud runs back and picks up tifa and puts her somewhere safe. Zack, barely consious tells Cloud to kill sephy. So cloud runs after sephy and yells at him and tries to attack him bare-handed.(for some reason) there, Sephy stabbed him (well thought he did) but actually cloud had grabbed the sword and threw him over the walkway into the reactor. (yes, the reason cloud one was bc he was injured, IMO anyway).
Phew,ok ,here I go with my theory about the "failed experiments"
Right after this, Cloud picks up tifa and takes her to a hospital somewhere (or somehow tifa gets out of there) and cloud goes back for Zack. (or there could be some other way) the point is, Zack and Cloud is captured by the shinra army. HoJo decides to make another Ultimate soldier: sephiroth. So, HoJo shower Cloud and Zack with maki and give them heavy doses of Jenova injection daily. Zack is able to take the showers and injections, but cloud cannot, so he loses his mind. Cloud is considered a failure.(I'm not sure about Zack, no in-game text or events can lead up a theory in either way)
alright, after the injections and the showers, Zack finds an opportunity to excape so he takes it and nabbs Cloud while hes at it. Zack finds an old guy to take them to midgar where Zack decides he will take care of cloud and wants them to become Mercenaries after cloud gets better. While cloud seems to be still F-ed up, Zack talks to him about joining soldier and the conversation he had with sephy. Cloud can only answer with a nod or a "uhhh" (which to me, was signs of improving)
So on the outskirts of midgar, the guy drops them off Zack carries cloud and heads for Midgar, but are spotted by shinra troops. Zack defeates the first wave and runs back to check up on Cloud, but is then Pierced by a hail of bullets, killing him. After this, the soldiers leave cloud bc they consider him dead anyway. So, after they leave, cloud takes Zacks buster sword and walks towards midgar train station and where he meets Tifa, who is over excited. While she tries to talk with him, Tifs's memories, Zack's Memories, and what is left of his memories, merge together forming the ex-soldier mercenary Cloud. Then the game starts with clouds first mission as a mercenary for Avalanche.
PHEW!!! enough of that! if you want to hear about Sephy's parents and vincent and how they tie together, you have to wait for someone else to post or for me to feel like it again. phew..
Also, to let you know, Tifa could tell there was something drasticly wrong with him, but she was scared to say something for the fear of losing him again.
so the answers:
is Cloud a clone: no, that is the real cloud
did cloud take Zack's memories bc hes a loser: no, cloud was having "Mental" problems
is Jenova Sephy's Mother: NO, but I'll let someone else explain that or I will LATER
does cloud go insane after defeating Sephy: NO, cloud goes insane after the EXPERIMENT!
about Soldier requirements:
You must be in shinra army or a turk to join.
You will be showered with Mako and revieve small injections of Jenova
If you fail, you return to your former duty.
Was Sephy killed at the reactor 5 years ago: NO, he was NOT, his body drifted to the north crater where he was kept frozen. This is why I believe the sephy that they were chasing after, was really jenova inside sephy's will, sephy wanted to become the ruler of the planet but the Meteor was really Jenova's plan to destroy the planet. Jenova manipulated sephy into thinking he was doing something for self-gain; just like she manipulated Cloud to think he was chasing sephy, but in reality he was being drawn to give sephy the black materia.
PHEW, No I am OFFICIALLY DONE! if there are any questions, Plz go ahead, and ask....