I know every 5th battle the enemies drop an exclusive item, but do they reset? So we can get the 5th battle again?

Resets only ever happen if there's been major changes to the battle coliseum. But there are instances when some challengers have their wins/losses/ties reset mostly those that show up every year during an event. Like the Morostide challengers and so forth. Normal challengers though, once you max them out (we call this getting the first 10 wins) that's it. You can still battle them but no they won't reset. [edit] But you can always get the 5th loot if you happen to have a secondary battle pet who is just as strong.

Resets are very very rare. I think there have been 2-3 in the 7 years I've been in Subeta. The last one was very recent, so another one won't come for a few years.