Can't you use some of those absorption items to power spell casting? If so that may very well explain the "font of unending healing". It also explains why your DM thinks you need some time to figure out how to beat him.
It sounds like your DM is a reasonable chap who wants you to suceed.... Is there anything else he might have mentioned about this cleric, or the rod? Something about the rod being powered by something else, or maybe a way that it interacts with something you have?
Generally I think you've received a -lot- of good advice. Until you tell us what spells you have prepared it's hard to give you concrete suggestions. "I can cast any low level spell" isn't going to do much against an enemy that eats magic. You might get lucky with a grease spell or something else that targets his bad save but otherwise it's of limited utility.
Disarm
This is the best move by far if you can do it. It's just an attack by the fighter, if he succeeds there are lots of things you can do to make sure the rod gets away from the cleric. Heck the fighter could make a normal attack, disarm, and then take the AoO to use a move action to pick up the rod. Even if the cleric somehow gets the rod back you can hammer him with spells while it's out of his hands. Fate spin up something nasty as soon as he drops the rod and plug him. Heck you could probably get away with a Hold Person spell. One failed saving throw and the fighter just coupe de graces him.
Area of effect spells
Have the fighter attack the cleric and then take a five foot step toward the closest wall. If he's in the middle of a 30 space the fighter should now be 5 squares from one of the side walls. Drop a fireball centered on the far corner (4 square area from selected crosspoint) and fry him. The fighter steps back next round to attack (or ideally the cleric moves to him and you just keep fbing him every round). If the fighter has a reach weapon now would be a good time to use it.
Anti-Healing
Have the archer ready an arrow to shoot when he casts healing spells. He's probably got a good concentration check but a lot of damage is going to make anybody fail the check.
*Don't cast a dispel on him, but ready a counterspell to use dispel magic to counter his healing. You can't do this a lot but if he looks hurt already you -might- be able to interfere with him long enough to let the rest of the team finish him.
*Flaming sphere, melfs acid (touch attack) etc. is a good idea. If the sphere stops on someone when it hits so it forces the cleric to move or else he has to make conctration checks for continuous damage. If he's moving you should be able to stear him somewhere to let you start fireballing him. Heck do both...
Summon a monster at flank, order it to attack when the cleric casts a spell.
Any one of these ideas isn't going to shut him down, but you could easily set it up so he has to make four concentration checks (OK really 3 checks and one dispel check but anyway) to cast a spell
1. Fighter is (I assume) in close combat, has to make a concentration check or suffer an AoO
2. Check against the continous damage from a flaming sphere (or acid arrow, or whatever). It's a low roll but he probably has to roll.
3. The archer gets a shot, if he hits that's another Concentration check. Ditto any summoned creature.
4. Your dispel check if you've prepared a dispel magic. I don't even think you need to make a spell craft check in this case. You've only got a 7/20 chance of stopping him but it adds up.
Your group gets three actions a round, he gets 1. You should be able to take him down.
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