Okay, this is going to be a long one. TL:DR version: Skip this suggestion and go on to the next.

Champions Online has persona nemeses (that's the plural of nemesis) for your characters, which was a nice touch... but they really lack the personal touch a nemesis should be. Plus, they really don't engender a superheroic feel; they're really just user-defined bosses for an alternate-currency mission system. Here's how personal nemeses should work, in my opinion:

First, your nemesis knows your strengths and weaknesses. And they're ready to shield themselves from your strengths, and exploit your weaknesses. If you're a fire blaster, your nemesis has fireproof armor, and fire-extinguishing tricks. They may not be themed for that -- in fact, you may have done everything in your power to make sure that your nemesis is as weak as possible to your attacks -- but your nemesis will guard himself as much as possible against your tricks.

Second, when your nemesis shows up? He's stronger than you. In fact, all things being equal, he's going to defeat you. Now, this is not a bad thing -- heroes lose. And in this case you're [i]supposed/i] to lose, so you don't have to replay the mission over again. The nemesis defeats you, he gloats, then he runs away to start his next nefarious plan.

What happens if you defeat your nemesis? Nothing. Your nemesis curses your name and runs away. But he gets [i]stronger[/i]. He gets henchmen. He gets allies. He goes and steals tech. He's going to humiliate you first. The next fight with him, he's even worse. Eventually he [b]will[/b] defeat you. If you defeat him a second time, he gets worse. He gets a named villain to assist. If you can go three combats without him winning, the fourth one is a [b]guaranteed[/b] loss for you. The game will cheat in order to make you lose.

The whole thing is, your nemesis is your personal foe. If he's easy to defeat then he's not your nemesis, he's just an annoyance. Spider-Man's nemesis is Doctor Octopus, not the Vulture. And again, the [i]point[/i] is that you're going to lose. Losing doesn't mean having to play the mission over again -- it means you finished the mission successfully. Winning might even mean that you [i]didn't[/i] complete the mission successfully.

(Now [b]there's[/b] an interesting conundrum for an MMO -- a mission you have to [b]lose[/b] in order to beat. You get players who want to see their characters win, win, win -- but they know that if they win this mission, they have to repeat it. Kind of a twist in thinking...)

Okay, so your nemesis showed up, and he promptly put you in your place. So what happens next? Well, his Nefarious Plan, of course! A storyline where your nemesis starts committing acts all intended to pay off at the very end, where the Plan will come to fruition and they receive the Reward They Deserve. This is basically a series of three to five randomly-generated missions where the villain has an Objective and a Goal. Your job is to keep him from obtaining the Objective... in which case, it's revealed, the villain had a Secondary Objective and the first one was Merely A Distraction. (The Goal comes in later.)

During this series of missions, you may Anger your Nemesis sufficiently that he decides that Something Must Be Done About That Annoying Hero. He sets up an ambush specifically designed to take you out (this one's even more brutal than the first Nemesis encounter) and then puts you in... wait for it... a Deathtrap! Your nemesis gloats for a while, then Leaves You To Your Doom, which is your cue to try and escape.

(Yes, TRY to escape. A Deathtrap should be a tough challenge which you might not get out of. But don't worry, you won't die... you'll just get rescued at the end by one of the Iconic Heroes. This only happens if you didn't solve the Deathtrap on your own. As part of "losing" the challenge, you get a Shame XP Debuff that lasts for a good while. You had to be rescued by someone else. Feel the humiliation and defeat. Shame, shame, shame.)

Escaping the Deathtrap, you have to wait for the final mission in the arc, in which you and your nemesis face off for the Final Showdown, and your nemesis monologues on how his Nefarious Plan will succeed, by listing off each Objective and the Goal it was to accomplish (which may make no sense... to [b]you[/b])... then the final climactic fight will take place, in which you will emerge victorious! (No, seriously. That buff the nemesis had when you fought him at the beginning of the arc? You have it now. If you can't win, then the Nemesis escapes, and there's more Shame Debuff time for you.)

This is how a nemesis behaves. When Doc Octopus breaks out of The Raft, he chases down Spider-Man (having had plenty of time to realize what kind of mistakes he made in the last battle, and how to correct them), humiliates the Wall-Crawler, then puts his next scheme in play. Web-head gets his shtick together, figures out how to defeat his nemesis, and faces him down at the end. Doc Ock goes back to the Raft, Spidey goes on to get screamed at by JJJ some more, and the whole cycle will repeat in a couple of years. Lex Luthor does the same thing to Superman. Joker, Batman; Red Skull, Captain America.

And of course, there should be a random chance that the final mission will result in A Menace Much Worse Than My Nemesis, and the hero and the nemesis will have to Team Up in order to defeat the Menace. This may result in a Heel/Face Turn for the Nemesis -- or the Nemesis may Heroically Sacrifice themselves in order to save the day.

Now, how's this going to work for the [i]villains[/i]? Just the same. When your Heroic Nemesis shows up, he's been investigating your latest nefarious schemes. First, you have to fight him in a battle where you are expected to lose (and flee from), because you realize How Much Stronger He's Become. You then have to start a Nefarious Plan of your own, to acquire and assemble the tools needed to Defeat Your Heroic Nemesis. Along the way your Heroic Nemesis may attack you with a Surprise Attack where he defeats you and carts you off to Holding, where you are eventually Left To Your Own Devices and given the chance to escape. Escaping, your plan culminates in the Final Battle where you use the power gained in the Plan to send your Heroic Nemesis packing. He'll decide there are bigger threats for him to handle right now, and you can get back to your original activities of Making Money/Becoming The Big Man/Vying For World Domination.

Please don't make the nemesis just another user-defined villain. Give him the tools to become memorable.

Oh, and if you go and get help to defeat your nemesis? Your nemesis isn't stupid. He'll go and get the Nemeses of your fellow heroes, even if he has to break them out of jail to do it. (They might go right back in afterwards, but when they're needed, they're needed.) So if Captain Amazing gets his Justice Team buddies The Nightman, War Wench, King Triton and Mr. America to help out in this latest scheme of his nemesis, Professor Peril, the Professor of Crime is going to break out The Laughing Man, Evil War God, Plunder Pirate and Azure Skeleton to assist him in his Nefarious Plan. (And it might turn out that the combination of The Laughing Man and his henchmen, the fury of Evil War God, the bravado and derring-to of Plunder Pirate and the chemical expertise of Azure Skeleton make for an even more fightening combination of villainy... giving birth to the fearsome Injustice Team!!!)