Thanks, James! Maybe now she'll believe me when I tell her that her writing rocks. Anyway, she has this statement to answer your question about the demons:
AS an explaination to him something like this should be said maybe... They are not from a religion, but from an alternate reality from my bored, bored mind. In this world, when people die, they can become a new being and live another life. On a world connected to the one they lived on. The living cannot travel the worlds, but the "dead" can. The living do not really even know of the "dead" world.
Their new race is based upon core personality traits that make them who they are. This does not mean there are inherently good and evil races, however.
As for reading more, I'll see if I can harangue her.