http://www.youtube.com/watch?v=bwmIzVBT1ic
Obviously, a good amount of credit goes to the guy who made this video. Do everything as he says. Equip all the skills and accessories that he tells you to before heading into the dungeon. However, in addition to what he says, you should equip Ailment Resistance on each of your Immortals. Like he says, you need to be level 80+.

When you get to level 24B in the dungeon, look around for Dark Kelolons (they can be tricky to find, so turn-tail until you find them). Place your four immortals in the front and Sed in the back. Use a normal attack with your four immortals on the Dark Kelolon, then in the same turn use Sed's Turn-Tail. He will counter-attack all your immortals for their entire health leaving them with one hit point because of Persistence. Once you've fled, press Y and go to Heal. Use the original Heal spell to heal each of your Immortals once. This should leave all of your Immortals with 100-something hit points. Then change your formation to put your four Immortals in the back row with Sed in the front, and fully heal Sed. You're ready to fight Killalon.

First turn, you will defend with Sed, and Double-Cast Reversa with all of your Immortals. First turn, he will cast Regenarus. Second turn, you will cast any status ailment spell (Black Magic) with three of your Immortals, and Double-Cast Reversa with one Immortal and cast Reversa with Sed. Second turn, he will cast Reflect and all three of your status ailment spells should be reflected, but have no effect because you have Ailment Resistance. Third turn, you will defend with Sed, and use Complete Defense with all four Immortals. Third turn, he will either cast Annihilation or Kelo-Ultimate Hit. Fourth turn, Double-Cast Reversa with all four-immortals. Fourth turn, he will either cast Annihilation or Kelo-Ultimate Hit again. Fifth turn, Double-Cast Reversa with all four Immortals and you should win.

This is how I just beat him, and I did it at level 83. I don't see anyway that this couldn't work. Just thought I'd share my variation of this method.