The Pizza Elemental was about the only thing I haven't been able to do in that game. It has 100 hit points but every single attack in the game, whether a powerful sword slash, powered up fireball or a lowly dagger thrust deals exactly one hit point. Throwing daggers or fireballs at him is pretty much a death sentence for you because of the pizzas constantly raining from the sky, so is the fighter's triple thrust technique because of the high risk of getting punched or choked to death.
There is only one method to defeat him, you must get up close and thrust your dagger or sword. No fancy combo or anything, just thrust and dodge his various attacks by ducking or stepping back, don't jump as it waste too much stamina. If you play as a fighter, leave your shield in your chest at the inn because it will be useless, slow you down and hinder your stamina regeneration. A lot of people also suggest doing the same for the chain mail although that one is up to you because you'll definitively take more damage from his attacks if you do so.
Fighters have an advantage over thieves and wizards because the Rising Slash attack comes out faster than a thrust attack and can counter the elemental's punch attacks.
For a detailed walkthrough on how to dodge his attacks, what to do when you run out of stamina, and how to counter his healing move, I suggest you read the "11C. Fact or Fiction?" chapter in CyricZ's FAQ on GameFAQs, which covers pretty much any aspect of the fight, except that tidbit regarding the fighter's Rising Slash attack:
http://www.gamefaqs.com/pc/952659-quest-for-glory-ii-trial-by-fire-vga-version/faqs/53981 Good luck!
