Green’s Dictionary of Slang

1. a convict.

1945

(con. 1820s–50s) Baker Aus. Lang. 42: A large number of synonyms for convict became current, among them [...] demon (a Van Dieman’s Land convict).

2. a veteran bushranger.

1909		J. Ware Passing Eng. of the Victorian Era 107/1: Demons (Austral.). Old hands at bushranging; derived from men who arrive from Van Dieman’s Land (Tasmania), some of whom are popularly supposed to have inaugurated bushranging in Australia.
[1915		Mercury (Hobart, Tas.) 27 Apr. 7/6: To my horror I saw a human head turned out of a kangaroo knapsack by a soldier who had just arrived. That was the head of Michael Howe, the demon bushranger, of Van Diemen's Land, as he was known].
[1923		Mirror (Perth) 3 Feb. 2/5: Who was our worst bushranger? A recent writer gives the palm to Michael Howe. Michael Howe, known as the Demon Bushranger etc].
1945		Baker Aus. Lang. 51: Demon was formerly used for an old hand at the game [i.e. bushranging].