Just because one shelters the villagers doesn't necessarily mean they're a good demon; they might simply be keeping the villagers as a reserve food source.
Karma is the most direct standard to judge whether a being is evil.
Anyone entangled with karma is not a good sort, they're usually immensely evil, with only a few exceptions, the most representative being the Nether River Sect Master who became a Supreme.
The Blood Sea is the filthiest place in the world, yet within it lies a top-grade Innate Spiritual Treasure, the Karma Fire Red Lotus.
This treasure automatically absorbs the world's karma as nourishment to enhance its own power, and the Nether River Sect Master who acquired it naturally became covered in karma.
However, the Karma Fire Red Lotus can suppress fate, so the Nether River Sect Master is unaffected by the karma. This is why he dared to plot against Red Cloud, attempting to snatch the Foundation of Sanctum, the Hongmeng Purple Qi, from him.
