The most common and most likely answer to this crossword clue is the 6 letter word DYBBUK
I've seen this crossword clue in The Guardian
D
Y
B
B
U
K
Buddy explains!

The straight part
We know that "Demon" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case demon = dybbuk.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does DYBBUK mean?
DYBBUK noun- A malicious possessing spirit, believed to be the dislocated soul of a dead person.