Chances are the Outcasts are causing you issues cause they are pains in the ass in general. You have a few strategies here: Since they are undead, they can be instantly killed with a Phoenix Down or Holy Water item, they are weak to Holy and Water so Aurabolt and Mog's Water Rondo Dance are really effective against them, also their Lifeshaver attack is earth elemental so if you have been exploring the areas I told you earlier, like say Thamasa, their is an enemy there that has Gaia Gear Vests as equipment you can steal from, they will completely neutralize their attack.

Zombie Dragon's are also susceptible to Phoenix Downs and Holy Waters. They are also incredibly weak to Fire Magic so have Terra just cast Fira on them as a single spell. Also Edgar's Noiseblaster will discombobulate the enemy and give you a few extra turns without worrying about being hit. Locke is pretty useless in here I'm afraid, the only decent loot he can steal is Phoenix Downs in case you decide to go for the one-hit-KO approach with the undead, Amulets, which are not that great of a relic at this point but can be sold for Gil, and Poison Rods which are pretty nasty damage items but are only useful if you don't intend on being liberal with whom you teach magic to. I'd probably drop him for Mog or Gau so I can exploit Water elemental weaknesses.

There is a also a switch that summons a Ninja, they are extremely dangerous because they are actually an enemy you should be fighting later on. They have some nasty AoE abilites and like to use the Vanish spell on themselves. Make sure someone casts a magic spell (preferably Thundara) on them every round in case they use a Invisible Scroll, have Edgar use either the Chainsaw or Drill tool for high damage and Sabin should use Meteor Strike since it should be his strongest physical Blitz available to you right now.

Editga: Also, there is a very useful weapon in this dungeon called Ultima Weapon. I will be weak right now but it can become the strongest weapon in the game. The problem is that this is your only real chance to get it until the absolute end of the game, so make sure you get it, because this is one of the dungeons that gets closed off from the player once you leave it.