[Radek]

Killing Kangaxx is a complicated task. First a lich and then, as it weren't enough, a demilich casting Imprisonment with high frequency, highly resistant to any magic and weapon, and regenerating at a remarkable rate. What to do?
1. You will need a +4 weapon as it was said above.
2. You will need somebody with a good THAC0 for the weapon as it was said above as well.
3. You will have to do something with the Imprisonment. Spell Immunity - Abjuration is one possibility but the spell is "caster only" so that only a mage can be protected by it. The green scroll Immunity to Magic is another possibility but only two such scrolls exist in the game.
4. You will have to do something with the "Demilich Howl". It is a killer spell used by Kangaxx after gaining the demilich form. Kangaxx seems to cast it only once. The Death Ward spell protects from the Demilich Howl.
Summary: If you have a kensai/mage trained in staves and owning Staff of Rynn or if you have a paladin trained in 2H swords and owning Carsomyr then you can deal with Kangaxx in Chapter 3. Otherwise, you will have to wait until Chapter 6 when you will be able to gain some powerful special weapons.
Because your protection from the Imprisonment will be always unsufficient, you must improve your position. Kangaxx is positioned wery well on the top of the sarcophagus - you must do something with it. I recommend wasting Kangaxx' spells one by one by peeking your nose downstairs, letting Kangaxx cast a spell and running back upstairs. You can heal upstairs. You can go to the inn and rest - Kangaxx' spells will not regenerate. At one moment, Kangaxx decides to follow you to the exit from the downstairs area. That's we wanted to achieve. Kangaxx is no longer strategically positioned on the top of the sarcophagus. Let him approach the exit from the area and run upstairs.
Prepare for the fight against a demilich. Return downstairs and beat Kangaxx. When it starts changing form, let the unprotected people run at the opposite side of the sarcophagus out of Kangaxx' sight. Only the protected people will remain. Beat Kangaxx the demilich.
At one moment, Kangaxx becomes "yellow" and starts to run away. It's time to use Ring of Ram on it (if you have the ring). Otherwise, follow him immediately, continue beating (don't forget that Kangaxx is regenerating!), and move the unprotected people so thet they remain out of Kangaxx' sight.
Hard work? Yes. But doable.