Yes, you CAN destroy this enemy!
I assure you it is true. You need a strong party, with plenty of powerful Water and Thunder spells. Junctioning is the key, as well as using GF abilities to get spells like Thundara and Water.

You've GOT to run from the machine twice, but after that, you can defeat it anywhere. You need to continuously pound it with powerful magic, and elemental-junctioned physical attacks. Renzokuken and Duel are effective, so it helps to give Zell or Squall high HP, so they can sit in the 'critical HP' range (allowing a Limit Break every time) without being at serious risk. Have Selphie continually cast Thundara, preferrably with the aid of Double, which can be drawn from the Evloret atop the communications tower.

Whatever you do, DON'T level up for this fight. If you level up, then the X-ATMO92 will level up also, becoming stupidly powerful. Keep your levels low, but your stats high, and just keep right on fighting.

Eventually, the robot will explode and you will get a heck of a lot of AP. The ending of the mission is quite a bit different, of course - no FMV - but you'll get a whopping bonus on your SeeD test score, except this bonus is reduced according to the number of times you ran from the machine, so it's best to run only the minimum of times - twice.