My guys communicated with the lich ahead of time, so he was expecting them, knew they had the phylactery, and was motivated to assist. They were following the ghost lions to meet him when the Red Hand minions fog-clouded the first room and sicced the bonedrinkers on them. (I know there's nothing in the module about the clerics being able to control the bonedrinkers, but what's the point of making them if the only person who can control them is the guy who's being coerced?) While the party dealt with those, the GL - fetched by the ghost lions - strolled in and basically took out the Red Hand guys by himself by casting Stinking Cloud into their room and then siccing the ghost lions on them. He then asserted control over the bonedrinkers and started giving orders to the party. (It was a lot less tidy than this, of course.) Both sides fulfilled their bargain and the party departed, but they plan to return and destroy his evil when they're a little more at leisure - by which time, he'll have an undead behir, more bonedrinkers, and some undead Red Hand minions to supplement his ghost lions, heh heh heh.
In my experience, the thing that makes module badasses into pushovers is treating the module as a fixed thing rather than a fluid one. Bad guys should be assumed to keep tabs on their own territory and respond appropriately to threats, regardless of how stupid the module assumes them to be. The GL has ghost lions all over the place. They should keep him apprised of events. He should also get Listen checks during the combats leading up to this confrontation.
Once he knows he's got a situation, think about things from his point of view. He hasn't survived this long without learning the value AOE spells like Stinking Cloud, numbers, and teamwork. Any adventuring party is a threat to any single opponent, just because of number of actions per round. His overconfidence, like the overconfidence of your party, is based on a sound appreciation of his own capacity to deal with people before they can deal with him. It's not bad roleplaying of an overconfident individual to let him play smart and keep them at arm's length, if these are likely to be the tactics that have worked for him before.
So - before the party knows he's aware of them, Resist Fire and armor up. Before he enters the room, in whatever order makes most sense to you - Dispel Magic (to get rid of those pesky curing wands), Heat Metal, Stinking Cloud, Bane, Doom, Ray of Enfeeblement, possibly Warp Wood if they have bows and staves, and Flame Strike, possibly supplemented by Ghost Sound to deceive them about where all these spells are coming from, and supplemented by attacks from (at least) the ghost dire lion listed as being in the Shrine of Blight.
Depending on the point at which he becomes aware of the party, misleading them into the Pool of Life or into the ooze pit are also good defensive measures.
Sounds like your party needed a decisive victory, though, so I wouldn't sweat it. This'll be good for their morale.
