Sephiroth would never be hit, again the discrepancy between their speed and physical strength is crazy.
There's also no evidence that Arthas is rendered utterly invulnerable by his armor. The raid party that takes him out damages him the entire time he's wearing it, and burns him down of his last 5% of health or so while he's still wearing it after Fordring shatters Frostmourne.
That's kind of just game mechanics to visually show the boss is dying.
And Sephiroth would be hit pretty quickly cause, well, that's one of his weaknesses (as per the fandom wiki):
Sephiroth is the main antagonist of the JRPG 'Final Fantasy VII'. He is nicknamed the One Winged Angel. 1 Background 2 Powers & Abilities 3 Equipment 4 Transformations 4.1 Bizarro Sephiroth 4.2 Safer-Sephiroth 5 Feats 5.1 Strength 5.2 Speed 5.3 Durability 5.4 Skill 6 Weaknesses 7 Fun Facts...
characterprofile.fandom.com
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Weaknesses
- Arrogant and crazy.
- Never uses his full potential.
- He cannot perform any magic-based attacks with his Materia should he run out of MP (though Bizarro and Safer Sephiroth forms do not rely on Materia and effectively have limitless MP, constantly replenishing it to full).
- Heartless Angel also leaves him open to attack if he activates it.
I can see him being arrogant enough that he plays sword fighting with Arthas, and at that point Frostmourne slices through his stuff because Frostmourne is a titan level weapon and titans are extremely durable to wear normal stuff needs an obscene amount of power behind it and even then it's a scratch.
Problem with all of your arguments is that you're allowing Arthas' universe's rules whilst ignoring Sephiroth's. If Sephiroth uses Meteor and melds with the planet then he's essentially becoming an entity far beyond the level of any of the titans. If for whatever reason Sephiroth dies, another clone has their Jenova cells reactivated. He's pretty much a Lovecraftian entity. Oh, and FF7R makes him even more ridiculous but that's spoiler territory at this point.
On top of that, his physical strength, agility, and magic already far outstrip anything Arthas is capable of doing. I've not played Shadowlands, but I assume there's additional BS that's been thrown in by Blizzard's atrocious writing team to make him immortal or something, but that doesn't matter because he'd never get Sephiroth into a losing position to begin with because Sephiroth overpowers him to a ridiculous degree. Sephiroth is the spawn of an eldritch space creature that manages to do what the Burning Legion does, except without needing a legion as back up.
I am fine with all the rules from all universe's being in place. Arthas would still be on top because his rules of cosmic affinities still apply, and Sephiroth even with his magic affinity doesn't align with WoW's, so unless he just asap learns death or light magic he has no chance.
The Lich Ling armor set was created to be near invulnerable by WoW's standards meaning it can tank a whole lot physically, and the only things that seem to damage it to any degree are Death or Light abilities or physical abilities infused with Light or Death.
Arthas as an individual isn't strong. It's when he wears the Lich King armor set is when he gets strong, and so do any of the wearers unless Zovaal deems it which is why Sylvanas was given enough strength to destroy the helmet, but you can only do that with a lot of Death or Light magic of which Sephiroth doesn't actually have, and that's key.