The first thing to do here is assemble your team. You need to choose all X-Men characters. Pick any four of Wolverine, Gambit, Iceman, Storm, Jean Grey, Psylocke, Cable, Magneto, and Juggernaut (yes, he counts). You should see "X-Men" in the top right of the team selection screen. Juggernaut is the strongest of these characters, so he's worth the extra money. I took Wolverine, Juggernaut, Gambit, and Iceman into the simulator. Jean Grey is so overpowered though, she's a good character to use.
Your foe here is Magneto. Attack him until you knock down about a quarter of his health. He'll throw metal shards at you. After you knock down a quarter of his health, a force field will go up around him and two large robots will spawn. Defeat both of these and the force field will drop. Once it drops though, then you'll have little robots to contend with alongside Magneto. Keep attacking him to knock his health down. After about 2/3, another force field will go up and four large robots along with little robots will spawn. Defeat all of four of the big ones, and Magneto's shield will drop again. Attack him again until his health is gone. Once he's defeated, any robot left will explode.
As for the powers to use, Wolverine's Lunging Rage ( & ) works really well and takes down his health quickly. Any clearing Fusion power will also work great against the large groups of robots.