Well according to my RE Class (about 3 or 4 years ago now) I had a brilliant teacher called Mr Travis, and he said a God has to be all these 3 things

Omnecient - Can do anything
Omnipotent - Knows everything
Omnipresent - Is everywhere

Sephiroth can not be a God because

a) If he were a God he could not be defeated because if he can do anything he could kill Cloud with not much effort, and if he knows everything, he'll know Cloud's moves and stop them happening.

b) He can't be everywhere because he has a physical body and presence. We can all see him.

I could go on for more reasons, but i hope i've given you some food for thought

SS Out