Ice prison quest!

[DormantDragon74]

How am I suppose to beat the guy?

[darkshintos]

You don't have to beat him to finish the Ice Prison Quest. The quest is to wait for 5 days in the Ice Prison, watch over him, and maybe get a few Legendary Skills from him.
He also doesn't try to leave the Ice Prison immediately either, its random chance. You can reload until he sits still and leave after your 5 days are up and complete the quest. You can re-enter the Ice Prison and fight him when he tries to break out.
If you let him break free, you can run away, and you should get a Legendary Skill from Taoist Sect or Shifa Temple (Based on latest Patch Notes). Beating him will give you one of the 12 Animal/Zodiac Rings.

If you are sparring with him, he should still be chained up and not be able to move. You can use Throwing with Feathered Arrows or hit him with a Bleed Weapon. Then you move out of his range until he bleeds out.
His longest Range attack hits 3 rows from himself so the corners of the room are safe. You're safe about if you stand 3 spaces away diagonally from him, or keep one diagonal space between you two.
Do this a couple of times and it should bring you up to Level 100.
If your fighting him during the escape, you want to apply as much status effects like Blind, Seal, Poison, Bleed on him.
On Nightmare, past Day 100, Lao is almost impossible to kill.
You'll need to do a lot of preparations to beat him and you might still lose on higher difficulties.

In the Ice Prison, meditating by the bed about 10 times should get you the Cold Yin Energy Manual. Running this should prevent the Ultimate Move Oneshot from Lao.
You also want to run the Emperor Yin Tang Sutra to disable his Inner Skill.
Have your Main Character use the Buddhist Ultimate Skill to negate 1 attack.
You want to get the Merit Plaque (Legendary Accessory) from the Confucius Sect, so you can slow down Lao and increase Spirit Gain for your MC.
Then you can give your MC the Legendary Sword Ganjiang from Langya Sword Pavillion to boost Spirit Gain.
With this setup, you should be able to Apply the Buddhist Ultimate to most of you team and if you can juggle who Lao is targeting, you should be able to get the Buddhist Ultimate back up by the time your last Invulnerable team-mate gets hit.
You should be able to manipulate his aim by having a character show their back to them, by aiming a skill at nothing behind them.
Otherwise you can stack Evasion on a character and hope they dodge. Lao has high accuracy so it doesn't seem possible to fool proof dodge his attacks. His attacks also have a Instant Kill effect, so even if they can tank a hit, they may still die.