That looks fine as far as syntax goes. You should probably add a mod version as well, but I don't think it is necessary. However, I think you actually made them stronger
"#prot 10" in a mod will give BASE protection 10, meaning 10 protection before armor is applied; same with "enc 6," that acts before armor, making their encumbrance too high. And "#def 12" acts before bonuses from their weapon and experience, so they'd end up with about 17 experience. As Endoperez said, you cannot mod Mercenary experience.
Try this:
Code:
#modname "Orion weaker"
#description "This mod is to fix overly powerful Orion mercenaries"
#version 1.00
#domversion 2.16
#selectmonster 366
#name "Eternal Knight"
#hp 10
#str 9
#prot 0
#att 8
#def 8
#enc 3
#end
#end