I have a theory about why Witnesses are so fascinated with demons. I think that in a round-about way, they seem to God more believable.
Here's the deal. I think everyone struggles with belief in God. After all, while he was supposedly performing miracles back in "Bible times"--parting the sea, sending magical food from the heavens, and so on--nothing like that happens at all today. Sure, maybe you read a timely Awake article or get a delivery of groceries from a friend just when you need it, but those are hardly the kind of real, indisputable manifestations you read about in the Bible. If only that kind of stuff happened today, it would be so much easier to believe in God!
"Ah, but that kind of thing does happen today--just not on the good guys' side," the thinking goes. The magic may be flowing in the wrong direction, but it's real alright, animating Smurf dolls, randomly moving chairs across the room, even sometimes breaking the necks of defenseless little girls (I remember hearing my mom tell me about this as a kid, and it scared me for years). It doesn't get any more real than that, right? And if the demons are real, then God must be real too!
When I was a Witness, I didn't believe all demon stories, but on occasion I would meet someone who seemed believable who claimed to have had some kind of demon encounter, and it really did reinforce my faith in God.
For this reason, demon stories are very strongly self-perpetuating. They're scary, exciting, and even help soothe that deepest fear that otherwise rational religious people have--that this whole thing is a big fairy tale.
Glad to be out of that craziness!
SNG
(Who, for the record, does not believe in God, gods, demons, unicorns, leprechauns, ogres, fairies, pixies, or any other mythical beings.)