The summoning of the Shadow Demon was a predestined effect of failing the Test of Thoth re: balanced judgement of facts without bias toward emotion. The way I played this was as below:
Cast Deeper Darkness, choose a victim likely to have a slightly lower will save (fighter or rogue – random roll designated Goran), Roll 50% miss chance to be able to touch Goran from under the floor, Will save to avoid possession. Goran succumbed.
Iron Wall bravely fought and did very well. As soon as Goran was possessed, he was destined to die unless expelled by Sunburst, Sunbeam or similar. I limited the Shadow Demon by not giving him his normal options of summon other demon (instead he used the lesser power of Shadow Conjuration ). I also excluded Telekinesis and Greater Teleport and allowed him only one casting of Deeper Darkness (normal ability is “at will”).
The death of Iron Wall was tragic but dramatic and you all did well to put the demon down so quickly after the death of the two characters. Fortunately your Raise Dead scroll was able to restore Goran and it seems that Lewis is quite keen on starting a new character for the next campaign session. Well done everybody!