Being a hero/ine means more than dispensing packets of righteousness and receiving money and glory. There's little satisfaction in laughing at the corpse of a pathetic little monster. This is where the villain/ess comes in.
The villain/ess must be suitably powerful so that not only is there great satisfaction in laughing at (and perhaps even kicking) his/her corpse, s/he will also win the admiration (and money) of countless kings, queens, and eligible young men and women. The amount of glory and money received by a hero/ine is directly proportional to the power of the villain, so take great care when seeking a villain/ess.
There are certain indications of how powerful a villain/ess is. Is s/he highly illogical and possibly downright stupid? Does s/he seem strangely attracted to gaudy and impractical clothing? Is s/he unbelieveably anti-social?
It is unclear exactly why villain/esses have a certain predictable-to-the-point-of-boredom Irritating Laugh, but most scholars believe that the Laugh is meant to conceal the fact that villain/esses have nothing intelligent to say. Now, this is where you must separate reality from RPGs. Contrary to the real world, where villain/esses develop brilliant plots, villain/esses in RPGs earn their status by being incredibly stupid and/or insane.
More often than not, a villain/ess's sole goal in being evil is to Take Over the World. There is little information as to exactly why the villain/ess wants to Take Over the World, since without exception, the villain/ess will destroy half the world in the process. As a further indication of stupidity, the villain/ess will often attempt to achieve this goal using only the resources of one person.
If you do not have a clear way to check the villain's intelligence, another way to spot a powerful foe is by his/her physical appearance. What you want is a shockingly hideous or shockingly gorgeous villain/ess. The reason here is that striking fear into the hearts of villagers is made far easier if said villagers first acknowledge the villain/ess's existence. Because of this need to grab attention, villain/esses often resort to tactics such as the Irritating Laugh and Cool-Looking Cloaks. The best villain/ess will know to match a Cool-Looking Cloak with Poorly-Located Spikes on the cloak's shoulders or sleeves where the villain/ess can easily impale him/herself.
Now, when the hero/ine actually fights the villain/ess, the hero/ine needs indications that this is the villain/ess and not just another underling. After all, the hero/ine would not want to mistakenly initiate a Long Dramatic Ending if the villain/ess was still waiting in the next room. That would bring not only eternal humiliation, but it would also take away the hero/ine's glory and money.
Remember, the villain/ess achieved his/her status by being the most anti-social and illogical of all monsters/bad guys. S/he will be in an empty room, floating in the sky, or perhaps in a hole in the ground. Regardless of the specific location, the villain/ess will be all alone, where s/he must have been waiting for days, with no entertainment whatsoever, for someone to just pop by. In real life terms, the villain/ess would be someone who, realising that a burglar had entered his/her home, would turn off all alarms, pull out all phone cords, and stand in the open bedroom door armed with a pillow.
Despite knowing full well that the hero/ine has inherent evil-banishing abilities and a long history of crushing evildoers, the villain/ess will stubbornly face the hero/ine alone, often with no tactic more clever than multiple forms. Under no circumstances will the villain/ess try to flee until such time as s/he is so weak that escape or Devastating Last Breath Disasters can be easily prevented by the hero/ine.
Now, the creme de la creme of the villain/esses will utter cliche and incomprehesible phrases. Key note: the best villain/ess will have a small library of Blasphemous Sayings -- extra points if the villain/ess also looks blasphemous and/or acts in a blasphemous manner. Look out for organ music, wings of any sort, or a long white robe.
The actual slaying of the villain/ess is of little concern here. Once the villain/ess has been identified and located, the rest is just a matter of hacking and chopping (remember to delegate this task to your stupid ally).