The Blue Dragon can be found on disc 4, once you've acquired the White Boa. Head to the upper-left (northwest) area of the map and to the right of that portion, there's an ice covering you need to ram using the White Boa. The Snowfields area is actually a puzzle, you need to go where the magic sparks are coming from, NOT where they're going to. Just do this a few times and you will encounter the Blue Dragon.
Suggested average level is 45+.
The Blue Dragon casts Death occasionally. The only thing you can do about it is revive your party member before the Blue Dragon goes down so the resurrected member can receive EXP and SP after the battle. Equip Bio rings on Kaim and Seth, cast Powerus on both of them using Sarah and Ming and/or Jansen. Heal from time to time. Bring his HP down as fast as possible since his ultimate spell, Leveler, does damage based on his HP, but he rarely uses it - in fact I didn't even see him use it. He isn't too hard as long as you keep at it.