I beat the guy and he used renew until he went berserk and kept using firaga when my guys were oiled up. Not pretty and I barely won. It was my first time going up against him also so I was fairly unprepared.

If you can't beat him then you don't stand a chance in the Necrohol. That place will destory you if you can't beat the bomb when it does renew. I suggest coming back when you have better armor and weapons.