Yes, there is a maximum for Max Resistance, it's 95%:

A character's default maximum resistance value is 75%, although certain Unique Items and the Paladin's Resistance Aura synergies can raise that number as high as 95%, the cap for resistances. Therefore, a character can never become totally immune to elemental attacks with resistance alone.

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The second way to reduce elemental damage - Absortion - is calculated after resistance. It could be both % based and integer number based:

Example: A player with Raven Frost and 75% Cold Resistance takes 400 hit points of cold damage. The 75% resistance takes the damage down to 100 HP. The Cold Absorb takes 20% of that figure off, leaving 80 HP, and then those 20 HP are converted to healing, leaving a final damage of just 60 HP.

It's worth noting that there are monsters with Conviction Aura, which reduces player resistances, it could be very dangerous. The aura looks like this:

As for fighting Diablo, not all of his attacks are Fire, the most iconic fire cone from his hands is actually Lightning. All of his elemental attacks:

• Cold Touch: A melee attack that freezes the player.
• Firestorm: Similar to the Druid's skill, but much larger and longer.
• Fire Nova: Releases a ring of expanding flame that will envelop several screens.
• Fire Wall: Identical to the Sorceress skill.
• Red Lightning Hose: Also known as Lightning Inferno, this skill is without a doubt his deadliest. It works just like the Sorceress' Inferno, but has a longer reach and deals far more damage. Characters with inadequate resists and sub-par gear perish within seconds.

source

There is a maximum for Max Resistance at 95%:

A character's default maximum resistance value is 75%, although certain Unique Items and the Paladin's Resistance Aura synergies can raise that number as high as 95%, the cap for resistances. Therefore, a character can never become totally immune to elemental attacks with resistance alone.

source

The second way to reduce elemental damage - Absortion - is calculated after resistance. It could be both % based and integer number based:

Example: A player with Raven Frost and 75% Cold Resistance takes 400 hit points of cold damage. The 75% resistance takes the damage down to 100 HP. The Cold Absorb takes 20% of that figure off, leaving 80 HP, and then those 20 HP are converted to healing, leaving a final damage of just 60 HP.

It's worth noting that there are monsters with Conviction Aura, which reduces player resistances, it could be very dangerous. The aura looks like this:

As for fighting Diablo, not all of his attacks are Fire, the most iconic fire cone from his hands is actually Lightning. All of his elemental attacks:

• Cold Touch: A melee attack that freezes the player.
• Firestorm: Similar to the Druid's skill, but much larger and longer.
• Fire Nova: Releases a ring of expanding flame that will envelop several screens.
• Fire Wall: Identical to the Sorceress skill.
• Red Lightning Hose: Also known as Lightning Inferno, this skill is without a doubt his deadliest. It works just like the Sorceress' Inferno, but has a longer reach and deals far more damage. Characters with inadequate resists and sub-par gear perish within seconds.

source