buy it from the PS Store
The Sephiroth costume came out on July 13, 2011 for LittleBigPlanet 2.
It is a costume for Littlebigplanet 2 that you buy from the Playstation store for $1.99 or 5.99 as part of the LBP2 Final Fantasy VII Costume Pack.
It will not be out. The Final Fantasy Costume Pack and the Individual costumes are only for LittleBigPlanet 2
You cannot.
Thanksgiving
You have to ace the three Savannah levels to get the full costume
It is only out for LittleBigPlanet 2 both as a separate costume for $1.99 and part of the Final Fantasy costume pack for $5.99 at the Playstation Store
If there is a contest on, it will probably give you an option to submit your costume
You purchase it from the PSN Store.
You can only get it at cristmas
There are quite a few but they costume packs cost less than purchasing each individual costume
While it is free at the Playstation Store you only have to download it if you want the costume