Yes, it was a mindflayer. Its not a super-duper strong encounter for a level 7 party but it was actually quite potent.
Mind flayers are always deadly at essentially all levels in essentially every edition of the game, and this encounter was pretty heavily in favor of the mind flayer. Yeah, "that's when a mind flayer would attack," but that doesn't make it less true. There are three D&D monsters that you should never underestimate because the game often lowballs them: dragons, beholders, and mind flayers.
Round 1
The Cleric went first and cast Spirit Guardians and Spiritual Weapons but then the Mindflayer went next and used Mindblast which actually stunned everyone except the wizard, including the Paladin, Cleric, and Rogue. The Wizard tried to Dispel Magic the Cleric so he could recover but he didn't realize it wasn't a spell and couldn't be dispelled. I lent him a bone for another action but he said screw it and casted fireball which did damage but not enough. The rogue recovered but couldn't act yet and the Paladin remained stunned.
Uh, what?
How did the cleric cast a 3rd level spell and a 2nd level spell in the same turn? That's not allowed even if a spell is cast as bonus action casting time. See PHB Chapter 10 under Casting Time, the Bonus Action entry reads, "A spell cast with a bonus action is especially swift. You must use a bonus action on your turn to cast the spell, provided that you haven't already taken a bonus action this turn.
You can't cast another spell during the same turn, except for a cantrip with a casting time of 1 action."
And why exactly does Dispel Magic not work on Mind Blast? The ability reads, "The mind flayer
magically emits psychic energy in a 60-foot cone." Sounds like a magical effect to me.
Round 2
The Cleric recovered too but couldn't do anything either. The mindflayer used his tentacles on the Paladin and the Paladin failed that intelligence save. The Rogue missed his shortbow attack on the mindflayer. The Wizard realizes to use Hypnotic Pattern even though it can't be positioned not to hit the Paladin or Rogue too. Mindflayer easily saves the DC 15 Wis save with their +6 and advantage, bummed Wizard. Paladin also saves just for the record.
Round 3
Cleric casts Bless on the Paladin and I think the Rogue and himself. He uses his BA to Spiritual Weapon since that wasn't broken from the stun. Mindflayer uses Extract Brains and crits. (I actually realized re-reading the action that they didn't have to overkill for instadeath but I guess it didn't matter since the Paladin with a max HP of 53 had roughly 20 HP left, the Mindayer does 80-something damage and insta-kills her. The Rogue lands his shortbow but the ally is dead so no sneak attack. The Wizard retries HypnoPat since its a longshot but would stop the madness. Mindflayer succeeds.
So, you focused down the Paladin. That's fine, but that's exactly what you did. That's why you killed a PC. In 3 rounds you did 4d8+4 + 2d10+4 + 20d10 (147) damage to them when they have 53 hp max (below average unless they had a Con of 13 or less). Instant death is not why this character died.
Round 4
Cleric drops bless to do his Spirit Guardians thing and does decent damage to the Mindflayer. Mindflayer uses Mindblast again and actually downs the Rogue while stunning the Cleric. Wizard is out of 3rd-level slots so he casts Magic Missile.
Round 5
Cleric fails 2nd save and Mindflayer Tentacles the Cleric and downs him. Wizard pops a healing potion on the rogue. Rogue sees they're losing and flees.
At this point, I saw the Wizard was about to flee too and I decided that the Mindflayer would rendezvous with their colony via Planeshift. They don't return for the cleric, though, and they failed their 3 saves.
Beyond that, your players clearly have no concept of what Mind Flayers actually do or what they're good at. You started the encounter with the Mind Flayer able to mind blast the whole party, your PCs failed multiple consecutive DC 15 saves even with a 7th level Paladin clearly nearby (since the party must have been within 30 feet of the mind flayer since the stunned paladin was immediately in melee range), then you rolled a natural 20 on one of the highest damage attacks in the entire game, and the party in general doesn't seem to understand how to use their own class abilities as they spend rounds 3, 4, and 5 doing things that sabotage themselves (shortbow with no ally, repeatedly using spells that the creature resists, etc.).
This is not a remotely average encounter. Your party rolled about as bad as they possibly could, you rolled about as well as I could imagine, and when your players got frustrated by the encounter they gave up.
However, given how things are roughly described, what was the goal of this encounter? Did the characters know they would be facing a mind flayer? Do the players have any knowledge of what mind flayers can do? Did you make it clear to the wizard just how obviously ineffective hypnotic pattern was from the first casting? Did you remind the rogue that the shortbow would prevent him from using sneak attack? Did you, the DM, tell the players when they were making decisions that their characters would obviously know were poor decisions, or did you let them walk into bad choices because they lack system mastery? In the middle of an encounter that was sliding quickly towards TPK?