Well... for starters....
He was not a First Class Soldier, but a normal trooper in blue uniform.
Cloud grew up in the town of Nibelheim and left with a goal to become as famous as Sephiroth (if i remember correctly).

After a going for a mission at Nibelheim, that's when all the confusion and mishap occured.

Did you finish the game yet? As I don't wish to give too many spoilers.

There is only one true way of finding out....

actually play the game. If still in doubt, paly it again.

wasnt he a clone or something?

He was an experiment yes, Jenova Cells were injected into his body. And Hojo did mean for him to be a Sephiroth clone.

Basically he was a normal child living in Nibelheim with Tifa, he wanted to join SOLDIER and become as famous as Sephiroth. So he left Nibelheim and went to Midgar, where he failed at joining SOLDIER but instead joined the Regular army. On the Nibelheim mission Sephiroth was killed, and Zack and Cloud got locked up in the Nibelheim mansion Dungeon (where you get Vincent) for experimental purposes. Eventually they escaped but were found and Zack was killed. Then Cloud was left at the Sector 7 trainstation where he was found by Tifa.

Correct any mistakes anyone? Although i dont think there are any.

Walkthroughs generaly won't tell you, and the game should be enough (though numerous playthrough may be needed to go back to earlier points and allow everything to soak in). Well OK...

Cloud was born in Nibelheim. He was a lonely child, left out by the other children. He made friends with Tifa but he always felt she never really noticed him. So he sought to grow up and become a member of Soldier like his idol, Sephiroth. He left the town for the city and joined the Shinra army.

Now this is where it gets confusing. Cloud didn't really manage to make it into Soldier. He was too weak to become one and so was only ever a 'Grunt'. When he returned to Nibelheim with Sephiroth and Zack on a mission, he was one of the Grunts in blue and kept his identidy hidden so that he would not face embarressment. When Cloud defeated Sephiroth at the reactor after he goes insane, Cloud and Zack are captured by Hojo and put in an experiment to make a 'clone' of Sephiroth (ie, make someone who is an equal copy to Sephiroth in strength) by injecting Jenova Cells and Mako into them.

Because Cloud was just a normal person, The mixture of Jenova Cells and Mako causes him a bad reaction and messed up his state of mind (Zack was OK as he was strong enough to withstand the treatment) however it had made him physicaly stronger, on par with members of Soldier and possibly even Sephiroth (this is how Cloud is now considerd a 'Clone', he is now essentialy a copy of Sephiroth strength-wise). Cloud and Zack escaped and headed to Midgar to become Mercenary's. They were caught up by Shinra soldiers and Zack was killed whilst Cloud was left for dead (still being ill). The Jenova Cells in Cloud reacted to the memorys of Zack (this being one of many powers of Jenova) and merged them togther, creating a facade in accordence to Clouds own ambition as a child and essentialy taking on Zacks role.

Deep inside, Cloud knows something isn't right (hense the voices in his sleep or when he has a funny turn) but he continues to reject the truth. When Sephiroth starts getting into his head and Cloud get confused as why he can't remember certain things, he just assumes what Sephiroth is saying is true. Everything gets resolved when Cloud and Tifa go to the Lifestream and 'unlock' the inner feelings and memorys that are really Clouds and not something made up by Jenova.

I didn't explain it well but thats pretty much it. Questions?