I just can't seem to defeat Hypnos. Every time I start, my people have..

Before you start any boss-type battle like that, it gives you the option to go through setup first. Go into that, and make sure you give everyone enough herbs and such to fill their health abr. Also, make sure no one gets too low during battle, and continue to give them health-raising things throughout the battle. Also, there's certain items that can be equipped to revive the characters when they go down (it's one of the stones they can equip, but I forget exactly which ones). Hope this helps!

I give my characters a pick-me-up and a herb and that usually gets the job done. You can equip them below the "ring" they hold. This means that they'll be used automatically when necessary. (Herb when you need to heal 80+HP, Pick-me-up when you are KOd). Other than that use fire magic as Hypnos is weak to it. I would use Heracles as a melee attacker, Axios as a ranged attacker, and all others as mages. If reflux will happen, make sure it only affects Gazuth since he doesn't stay on your team after this battle so he is disposable and can be beaten up. Also only attack the big guy, his summoned smaller ones will flee once he falls, so it's better to focus all your attacks on him.