: I'm not sure I would call the Myrkridia animals... demons
: is the word that comes to mind.
To be demons, they'd have to be demons of a given deity, and there isn't really any indication that they are. We don't see any pentagrams in Thalor's tower, we don't see any fanatical cultists, we don't even see any Myrkrydian priests (mages, yes, but there's no indication that this magic is granted by gods rather than that the Myrkrydia in question is simply very intelligent by their standards). I'd agree that Fetch were demons, but Myrkrydia seem to be simply very fierce, rather monstrous, semi-intelligent animals.
: D&D term Lawful Evil
I'm not so sure. The Watcher strikes me as being more a Chaotic Evil kind of guy. To be Lawful Evil suggests that you have some form of binding rules which govern your actions, which can be seen in Balor's hatred of the Myrkrydia and the Deciever's warped loyalty to the Cath Bruig empire. The Watcher doesn't seem to have any such constraints- and, under some circumstances, the "chaotic" part can mean mad, which the Watcher certainly is.