Two, don't stand near the walls. He only teleports to you if you're close to a wall. This is harder in the shadow realm, but you have discipline. Deal with it.
Three, spend that discipline. If you're in doubt, use smoke screen. If your SS button is greyed out at any time, use preparation. You'll rarely die to being out of smoke screen, vault and preparation at the same time. You will, however, die because you were greedy. Should you find yourself in a situation where you're out of all three, just run as far away as possible, avoid the walls, and pray.
There. You no longer have an excuse not to get that Diablo down (inb4 not at Diablo yet, computer problems etc). Undergeared? I had 24.8k dps unbuffed (33.4k with archery and steady aim) and that shadow image was a pain in the !@# (as I couldn't burst it down quickly), but after hours of trying and becoming a boss at using SS and vault to avoid its attacks I was very close to winning the entire thing. Then I picked up that disc quiver and won in about 3 attempts.