Doesn't sephiroth have a move that counters time stop? I've seen tons of Dante vs Sephiroth threads where people say quicksilver wouldn't work on him.
Time stop is instant is really only countered with another time-stop, I think they mean haste but I don't think he has time to do that, not to mention it's due to the effects of a Stand which can only be affected by other stands. People thought he was immune to time stops due to having access to all spells in FF7 without the use of materia, but that's speculation. However Sephiroth himself has a time stop "Stopga" and it last 30 seconds, in the game whenever an enemy cast it on you you lose instantly, that or you ned to use a status remove which nobody on team 1 has. However Dio can move freely in frozen time for at least 7 seconds. Sephiroth also has soul attacks that give him an edge. Still Dio's attacks works faster and as seen in other games (Like Kingdom Hearts and even FF7) he is still vulnerable to spells and time stop. Sephirtoh himself just has every spell so he has slow, haste, and time stop, though he didn't really do any of these (That I can remember in my playthrough) it is still heavily implied he can. He also warps space (I think) with his spells, at least when you play as him. But due to the speed on team one and the fact Dio can move for at least 11 seconds in frozen time I think he can win, Sephiroth must also cast his spells and charge attacks like Supernova so for that I say he loses. Yusuke or Aizen can take him on.
In a fight against Dio it depends but I lean more on Sephiroth if he keeps distance, but I can see Dio pulling a win too if he does not start with supernova or something. But a time stop, mudamuda, space rippers or freeze will undo him, we have no durability feats for Sephiroth, and he can't see or destroy Dio's stand. And if we are going by battles we saw Dio stomped Sephiroth: http://naruto.viz.com/forum/showthread.php?t=90231
Dio's time stop is also universal and he is still faster than Seph by a lot.