This is the term that, as his narrative proceeds into Volume 3, Victor will increasingly use to denominate his Creature. But to have it thus introduced here without any preparation, and in this peculiar period spelling, is to raise a serious question as to what exactly Victor may intend by the term. Walton's interpolation, "as he called him," emphasizes the importance of perspective in any such definition and may even indicate his own lack of assurance about what is meant by Victor's usage.
Samuel Johnson's Dictionary (1755) is uncharacteristically reductive in its definition:
DEMON, n.s. [dæmon, Latin; daimôn.] A spirit; generally an evil spirit; a devil.
The Oxford English Dictionary, in contrast, exhibits the full range and complexity of the word's history. (The examples are here abridged.)
demon 1. Also 6-9 dæmon. In form, and in sense 1 a, a. L. dæmon (med.L. demon) spirit, evil spirit, a. Gr. dai'mwn divinity, genius, tutelary deity. But in sense 1 b and 2, put for L. dæmonium, Gr. daimo'nion, neuter of daimo'nioj adj. '(thing) of divine or dæmonic nature or character', which is used by the LXX, N. Test., and Christian writers, for 'evil spirit'. Cf; Fr. dimon (in Oresme 14th c. dimones); also 13th c. demoygne = Pr. demoni, Ital., Sp. demonio, repr. L. dæmonium, Gr. daimo'nion.
a. In ancient Greek mythology (= dai'mwn): A supernatural being of a nature intermediate between that of gods and men; an inferior divinity, spirit, genius (including the souls or ghosts of deceased persons, esp. deified heroes). Often written dæmon for distinction from sense 2.
b. Sometimes, particularly, An attendant, ministering, or indwelling spirit; a genius. (Chiefly in references to the so-called 'dæmon of Socrates'; Socrates himself claimed to be guided, not by a dai'mwn or dæmon, but by a daimo'nion, divinum quiddam (Cicero), a certain divine principle or agency, an inward monitor or oracle. It was his accusers who represented this as a personal dæmon, and the same was done by the Christian Fathers (under the influence of sense 2), whence the English use of the word, as in the quotations. See tr. Zeller's Socrates iv. 73; Riddell, Apology of Plato, Appendix A.).
2. An evil spirit.
a. (Representing daimo'nion of the LXX and N.T. (rarely dai'mwn); in Vulgate dæmonium, dæmon). Applied to the idols or gods of the heathen, and to the 'evil' or 'unclean spirits' by which demoniacs were possessed or actuated. A Jewish application of the Greek word, anterior to Christianity. Daimo'nia is used several times by the LXX to render shedim 'lords, idols', and secirim 'hairy ones' (satyrs or he-goats), the latter also rendered ma'taia 'vain things'. It is also frequent in the Apocrypha (esp. in Tobit), and in the N.T., where in one instance (Matt. viii. 31) dai'monej occurs in same sense. In the Vulgate generally rendered dæmonium, pl. -ia, but once in O.T. (Lev. xvii. 7), and in 10 places in N.T. (8 in St. Matthew) dæmon, pl. -es. These words are indiscriminately translated deofol in the Ags. Gospels, feend or deuil in Wyclif, and in all the 16-17th c. versions devil; the Revisers of 1881-5 substitute demons in Deut. and Psalms, but in the N.T. retain devil, -s, in the text, with the literal translation demon, -s, in the margin. Quite distinct from this is the word properly translated 'Devil', dia'boloj, which is not used in the plural. It is owing to this substitution of devil in the Bible versions, that demon is not found so early in this, as in the popular sense b, which arose out of this identification.
b. In general current use: An evil spirit; a malignant being of superhuman nature; a devil.
c. Applied to a person (animal or agency personified), of malignant, cruel, terrible, or destructive nature, or of hideous appearance. (Cf. devil.)
d. fig. An evil passion or agency personified. spec. an alcoholic drink. Also attrib.
e. Applied to a being of superhuman or 'diabolical' energy, skill, etc. (cf. 3 a spec.); also to an action, etc.
Accordingly, although Victor Frankenstein obviously wishes to "demonize" his Creature as a kind of fiend or devil (as in 2b), in both his actual encounters with him, the Creature acts as a kind of conscience in the sense of 1a (II:2:7, III:3:13), reminding him of his duties as a creator. In later chapters of the novel, where a complex doubling effect occurs, it seems at times as if the Creature were, indeed, an inner genius, as in 1b. The Creature does, of course, have the hideous appearance defined in 2c, and he exhibits the extraordinary energy and skill noted in 2e, aspects that remind us that Victor himself fabricated his Creature to be superhuman. This sense of his own responsibility for the Creature's nature is exactly what is canceled by Victor's calling him a demon.