If Golbez is not in the party with Cecil, the Dark Knight will instantly kill the party during the first phase and it will be Game Over. If he is, Golbez will take a fatal hit for Cecil. During the second phase, Cecil will regain his stats and abilities and will be able to fight the Dark Knight.
The Dark Knight will use strong attacks during the battle. His Black Fang reduces a party member to one HP, and Darkness, which can be dangerous if there is no White Magic user available. He can also use Doom, which will always work. He may counterattack magic cast on him with Doom.
If the player has Golbez, Cecil, Ceodore, and Rosa in the party, Golbez will survive and will be playable in the game permanently.