They appear in the "swamp area" of the Northern Crater. (Movers, they give 2400 ap, provided you finish them in time, also appear there.) They will ask for you to give them an elixir, and the only way to damage them is to use it on them. (If you attack them when they haven't gotten one, they steal an item from you, and you can't get it back unless you kill them.) Using a Megalixir will not work.
And of course, the only way to get mass Elixir's is the wonderfully convenient W-Item Materia

Some may consider it cheating, but hey, whatever works

(At least it's inside the game, not an Action-Replay code or something.)
You may also frequently run into Veterans (Ahrimans), Christopher and Ghighee, but mostly Magic Pots (and Movers, rarely.) Having the "Enemy Lure" Materia on, should help. (Won in the Battle Arena. Only like a few hundred BP, you should get one in one match.) You should master a few (or like me, eight

) just doing this.
Now, what I do, is equip Cid's Scimitar (hopefully, you didn't sell the Apocalypse Sword, like I did...), which has triple AP growth. However, it only has two materia slots, which you should fill with Mime and Counter (or some other high-level materia). With that, you can slaughter magic pots for easily 3,000 ap a fight, 6,000 if you encounter two. Better yet, If you have Apocalypse for Cloud, more materia can be levelled. Just make sure to replenish your item supply.
Whew, hopefully that explains everything. Maybe I should make a questions thread..Any more questions, ask!
