Fighter's Challenge with full party survival.

[Balthasar]

This is the easiest way to defeat the Fighter's Challenge.

You need:
1x Gold Key from the Ogre
4x Bomb of Choice (I used lightning.)

Equip each character with a bomb in hand.
Put the Gold Key in a character's hand for easy access.
Enter the challenge.
Immediately move one step forward before a monster fills it.
Toss a bomb and move forward into the opened space.
Turn towards the key hole and bomb your way into the square.
Use the key.
Now turn around and bomb your way back and into the doorway.
Equip the shield and battle the monsters one by one.

You might need some potions. I used a few, five or six. Passed the challenge with regular characters as soon as I had cleared out floor 6, and my entire party survived.

One more tip: Poison cloud.

[Komag]

indeed, poison cloud is your friend here! also, you can mouse-throw bombs to use more faster if you have to, but I don't think anybody gets experience points when you do that