I've been in the fandom for quite a while. Not exactly from day one on, but early enough to see how Cloud was written before the clichés really set in and then notice the difference when they did. I'm not sure when he became a character who's just about impossible to get right, but he did.
Biggest problem with Cloud in fanfic is that most people are content to use superficial assumptions about him as basis for his characterization without investigating him further. If Cloud was a simple, straight-forward character, this wouldn't be a problem. Cloud, however, is a little more complex than that.
The first thing that usually goes wrong while trying to write Cloud is that when people ignore the fact he's a character with an active personality who has no trouble expressing his emotions openly and has no tendency to get depressed.
..stop booing at me, I'm not kidding.
Thorough the entire game, Cloud's initial reactions to distress are almost never about depression, but instead about anger, and he has absolutely no trouble expressing what he's feeling. Examples include the following:
1. When he got blamed for Tifa falling off the cliff in Nibelheim, his reaction was, in his own words:
"I was so angry... Angry at myself for my weakness. Ever since then, I felt Tifa blamed me... I got out of control... I'd get into fights not even caring who it was."
Outward reaction, not inward. Also notable is that instead of getting violent with himself, he gets violent with other people. It's not healthy in either way, but it's not something I would call passive.
ETA: To put it better, most of his anger is inward, but he also finds outlets for that anger, first by getting into fights and later through his idolization of Sephiroth, leading to him leaving to join SOLDIER. It's not the best way to deal, but he tries nevertheless.
2. When Nibelheim got burned, Cloud was unconscious first, but the moment he woke up he wasted no time making his way to Mt. Nibel to stab Sephiroth in the back. He doesn't even stop to check up on Zack and Tifa first; revenge is the priority, and considering he caught up with others so fast he practically teleported it's safe to assume he wasted no time in getting shocked.
3. When Sephiroth manipulated Cloud into handing over the Black Materia to him, Cloud's initial reaction is shock (mind-rape can have that sort of effect).. and then he starts beating Aerith. The most interesting thing about this is that Sephiroth is never blamed for the beating, indicating that it might have been Cloud's own doing, though very unlikely.
4. When Sephiroth kills Aerith, Cloud's reaction is emotional and, yes, angry, and he obviously isn't enough of a helpless wreck not to fight Jenova off with the rest of the Avalanche. This is despite the fact that Sephiroth had just mind-raped him for a second time in order to get him to kill Aerith.
ETA: To clarify, his sorrow about Aerith's death is the foremost emotion on his mind, but he's also able to address Sephiroth and not cower before him, unlike in their earlier meeting.
In fact, the only part of the game where he really gets scared and hesitant is after Sephiroth first got him to hand the Black Materia over and Aerith's exit (in Northern Crater, Cloud is first casual about Sephiroth's claim he isn't really Cloud, then jumps to the screaming denial), but even then he doesn't withdraw into himself. On the contrary, Cloud being open about his feelings is a consistent trait that is present even before he learns the complete truth about himself.
5. After Aerith left, he openly confessed to Tifa and Barret that he's afraid of what might happen when he next met Sephiroth, and that he might go crazy. That didn't, however, stop him from eventually overcoming his fear and leaving for the search of Aerith.
6. And when Aerith died, he was done with depression and ready to do things again. Before that, however, he told Avalanche this:
"I came here by my own free will. Or so I thought. However.. To tell the truth, I'm afraid of myself. There is a part of me that I don't understand. That part that made me give the Black Materia to Sephiroth. If you hadn't stopped me, Aerith might have been.. There's something inside of me. A who is not really me. That's why I should quit this journey. Before I do something terrible. But I am going. He destroyed my hometown five years ago, killed Aerith, and is now trying to destroy the Planet. I'll never forgive... Sephiroth. I... I must go on. ... I have a favor to ask of you. Will you all come with me? To save me from doing something terrible?"
Cloud is only emotionally aloof in the beginning of the game when he's lost in his SOLDIER-persona, which is all about tough guy bravado (and actually not at all about Zack; more on that later). Other than that he is all right with sharing his feelings with the others and he's just as all right with expressing his emotions instead of hiding them. This is also why Cloud's behavior in Advent Children, no matter how good reasons he has for it, is fundamentally wrong: His passivity in the movie simply doesn't fit with the pattern of emotional reactions that were established in the original game, so while Cloud getting depressed over dying is valid, the way that depression manifests isn't. It takes a lot to really break him down, and that leads to my next big point.
The list of crap that happens to Cloud in his life is pretty sad. He's an outcast as a kid, fails to achieve his dream of becoming a SOLDIER, his hometown gets burnt and his mother killed, he nearly dies himself in Sephiroth's hands, he's experimented on for years and becomes disconnected from himself in the process, his friend dies while saving him, he spends months believing he's an idealized version of himself, he gets mind-raped, his other friend dies, nearly by his own hand, his identity is questioned and proved false, and finally he ends up Mako-poisoned and out of his mind. That's a lot of reason to angst, right? It's perfectly reasonable that he would get emo over all that shit, right?
Only there's one problem: He really doesn't.
The common claim in fandom is that Cloud pretended to be Zack in the beginning of the game, which sadly serves as a proof for most fandom not really paying attention to the game. Zack had only one really major scene, but it was enough to show that Zack, as he was, was a cheerful, helpful person, quite the opposite of the jerk Cloud was when we first met him. Aerith comments on the physical resemblances (including their body language) between the two if you get a date with her at the Gold Saucer, but also says that they were different. After resurfacing from Lifestream, Cloud himself explains why:
"I never was in SOLDIER. I made up the stories about what happened to me five years ago, about being in SOLDIER. I left my village looking for glory, but never made it in to SOLDIER. I was so ashamed of being so weak; then I heard this story from my friend Zack. And I created an illusion of myself made up of what I had seen in my life. And I continued to play the charade as if it were true."
Cloud never, in contrary to the popular belief, adapted Zack's personality, only the story of his life. Why is this significant? Because it shows that even after years of suffering and fragmentation of his identity, there was never a point where Cloud would have completely lost the sense of his own self. SOLDIER Cloud was merely an "improved" version of the real Cloud, not a representation of Zack, and his true personality was intact enough to show through his charade and was eventually fully recovered in the Lifestream.
So while Cloud has major flaws and weaknesses and breaks under extreme pressure (which is, like, part of what makes him human), it also takes a lot of banging before he finally breaks down, but in the end he recovers to the point he remains optimistic and cheerful for the rest of the game. Passive Cloud who is prone to depression simply isn't canonically valid.
In fact, if fans wanted to write about genuinely passive character who IS prone to depression, there's Tifa. She's the one who withdrew to herself, let her fears and insecurities get the best of her and got emotionally defeated from time to time to the point of being not functioning at all. She often gets criticized and bashed for being this way while Cloud gets infantilization treatment. I wonder why?
Now that we've punched fanon Cloud in the face many times, what conclusions did we get?
1. Cloud is a determined person who sets out to do things, even if he hesitates first.
2. Cloud soothes his insecurities with bravado instead of wallowing over them.
3. Cloud talks about his emotions. (OH MY GOD)
4. Cloud expresses his emotions instead of holding them in.
5. Cloud is perfectly capable of getting over his crap.
Then, what else does he have to him?
6. A sense of humor. He teases Barret ("You were worried about me!" comment in the beginning of the game, "You look like a bear wearing a marshmallow" comment at Costa del Sol), Aerith ("I thought you were cut out to be Soldier" when they're escaping from the Turks) and Yuffie for various times, is dorky very often ("Lets mosey!") and has a rather light attitude in general, both before and after the Lifestream-sequence. 24/7 moody Cloud is yet another myth.
7. A lot of personal charm. He wins the Shin-Ra-hating Barret over rather fast, both Aerith and Jessie take a liking to him even when he's bit of a jerk around them, he and Bugenhagen bond quickly when they meet and the entire Avalanche stays loyal to him even after he proves himself unpredictable and possibly untrustworthy. You may argue whether he's a good leader or not, but he's inspirational at least.
8. Compassion. He comforts Aerith in Cosmo Canyon when she feels depressed about her past (and offers an ear for everybody else), Tifa when she wants reassurances before the final battle at Northern Crater, and even expresses sympathy to Sephiroth when he hears that Hojo was his father. However, he also knows well enough when sympathy has ceased to be enough; he has no patience for Yuffie when she fishes for sympathy during the Wutai-quest, and as for Sephiroth.. well, the fact his personal reason for joining the final battle is to get to kill Sephiroth should speak for itself.
9. Optimism. When he pulls his mind together, he's determined to move on with his life as himself after that, and he also emphasizes the importance of moving on to the others, and encourages them to find reasons to right for.
He can also be arrogant (his dismissive attitude to Avalanche in the beginning of the game), petty (the times you can get him to tease Yuffie, his huffy reactions to getting teased about something himself), insensitive (you can get him treat both Tifa and Aerith like dirt and it would be canon, after all), and he obviously has no problems joining organizations that get civilians killed or hunting somebody down for purpose of murder. His reasons for joining SOLDIER were selfish and saving the Planet was secondary to killing Sephiroth. Cloud's not fluffy, but he's far from being all doom and gloom. So when writing the guy, get in touch with the whole guy; that's the best way to make sure he'll remain himself for the whole story.