When it comes to healing, nobody does it better than Medea Lily. Her heal, 3000HP at level 10 with a 5-turn cooldown, plus her NP, 3000HP at NP1, plus her third skill (Ephemeral Love), which doubles her healing power for 1 turn at level 10 (8-10 turn cooldown though), means she can heal a maximum of 12k, more if she has the right CEs equipped. Her bond CE boosts the party’s received healing by a massive 30%, meaning 3900 per heal, 7800 if doubled, 15600 if skill and NP are both used and boosted by her third skill.
Three Arts cards make it easy to build up her NP with Arts Chains, especially in a full on Arts team. And in a pinch, Rapid Words can get her from 0% to 100% as early as level 4, 150% at level 10, though you’d only go that high to reduce the 9-turn cooldown.
I don’t have her myself, and I have only borrowed her for one challenging battle (Nero Fest Assassin Army), so I can’t speak for her performance beyond that one. When I used her for boss battles (Nero Fest included) and other minor battles, however, it’s clear that she’s strictly there to heal. Her damage, meager as it is due to her low attack stat, could only be considered a bonus whereas the main reason you’d choose her cards was to build up her NP. And despite keeping the team alive, she has no way of preventing/stalling/avoiding/tanking an enemy’s NP.
Because of this, you would certainly need to bring in someone who can deal with the enemy’s NP, one way or another. This leaves the third slot for the DPS. And, depending on who the second support is, that DPS may end up lacking any attack boosting skills outside of their own (and some may not even have their own depending on who it is). I suppose Merlin would do as the second supporting Servant with a Buster DPS, preferably one with 2 Arts Cards to help Merlin and Medea build their respective NP gauges.
Her performance in Nero Fest’s battle is supported by the fact that the enemies were all Assassins, mostly forgoing the need for additional damage buffs, and the presence of Irisviel, whose NP’s Guts kept the team alive even if an NP went off. And with 9 Arts Cards, 12 counting NP Cards, even Irisviel’s poor NP Gain could be overcome.
TLDR, she’s a great healer but her use in a challenge quest would be situational due to the lack of anything outside of healing.
EDIT: I can actually think of one situation where you wouldn’t need any anti-NP skills. Party is made up of only Casters, enemies are all Assassins, and you have high level defense buffs on the party, preferably multiple stacks by the time NP hits. I’m not sure how well this holds up against an ST NP, but I’ve survived AoE NPs with a similar setup.