Demons in dreams probably represent parts of your unconscious mind that have been repressed and neglected and arc now threatening to disrupt or mutilate the psyche. They should be approached lovingly, given attention and integrated into your conscious life. This will bring about their ‘conversion’: they will cease to threaten and will contribute their vital energies to the enhancement of the self.
Self-knowledge - knowing what we are earning around with us in our unconscious - is the only sure defence against what in ancient times was called demonic’possession, which in psychological terms means the conscious ego being taken over by unconscious forces (obsessive fear or anger, or whatever).