Well, I think that I owe you to know just how the battle went down, though it is a bit embarrassing really.
I joined up with the others, and after 9 hours of rest and preparation we went for the 'fairy' once more. The room was considerably larger than the 30x30x30 box I had been told about, which of course allowed for more chasing around, but more about that later. The lair were an underground cathedral of some sort, clearly devoted to some demonic deity, and the little bastard were hiding behind a pedestal that stood in her summoning pool. She surprised us with a Summon Monster II spell, and the monsterous giant spider she summoned immediately attacked the druids riding dog. I blew my knowledge check completely, and believing that the little barbie doll with claws and bat wings were some sort of humanoid, I blew my first round of combat casting Sleep on her. On the second turn, I tried casting Enlarge Person on the ranger, who tried to resist my spell (and failed to do so), declaring that my "dex debuff would ruin his character". Anyways, the guy spent the next 6 rounds shooting and missing, while using his Rapid Shot feat every turn, to "maximize his potential damage output", and proved utterly worthless by missing every single shot he fired. On my second turn I enlarged the bard, who also shot and missed every shot in the first 6 rounds, despite using Targeting Ray and bardic music. The druid tried to catch the boss in a net, but he gave up when he missed his throw on a roll of 19, which meant that the creature had a touch AC of 22, and started vandalizing some skulls that stood on spikes around the pool.
I had now blown 3/4 of my first level spells on this single encounter, and wasted my buffs on a party that did little more than running around in circles while flailing their arms above their heads. After watching the three stooges 'fighing' for 5 rounds, I suddenly got depressed, suicidal and bored at the same time, and decided to charge the monstrous spider with my dagger, which resulted in me getting bitten and poisoned, but luckily not so much that I lost consciousness. The fairy started to blast the stooges with a projectile vomiting attack that nauseated the ranger, and then the DM got bored too. The fairy thingy decided to land between the druid and the bard and attack them with her tiny claws, obviously fudging rolls that made it easy for them to grab her and stomp her to death.
The fight took somewhere between 20 and 30 rounds, and more than 2 hours of realtime play, and we would have been forced to retreat if the DM had not given us the free victory. The party sucks to high heaven, but I can't help but to wonder if it was a little too hard. DR 5, fast healing, flight, AC 22+, spellcasting (CL 5+) and flight, at-will invisibility (not used in round 2) seems harsh for a level 2 party in my book.