I can't seem to compete in the Coliseum, I failed the prelims and have..

When you first visit Olympus Coliseum, talk to Phil. Stand in front of the large stone block and run into it to get Sora to try and push it.

After this, practice the 2 courses with the barrels (helps to have a short attack combo of 3, making barrels hit each other, and using Fire spell to destroy barrels that are far away).
Phil then gives you the Thunder spell. Try to leave through the World Exit door.

Come back with the Entry Pass to compete.
Equip potions for Sora to use during battle in the Menu screen. Most of the enemies should be fairly easy. If not, defeat Heartless on other worlds to level up some more.
Safest way to defeat Cloud is to hang back whilst Donald and Goofy attack him (as they will eventually get back up from being KO'ed). Hit him 1-2 times when he leaps and stabs his Buster Sword into the ground, then retreat.

For the boss fight, use Dodge Roll with square to avoid the fireball and dark attacks. Also use Potions when HP is low. Wait until boss is standing and attacking head-on, then hit 1-2 times from the side and move out of range, then repeat.