[Xietor]

"But does the Decay or whatever effect on units not actually directly hit by the banefire or by banefire Archers.. Always end in death?"

Decay has very little effect on demons, since they have extremely long lifespans. It does age them, however. I guess if they had 2 or 3 battles where they got hit with decay, they may suffer some negative effects.

But decay is a pretty inefficient way to deal with demons.

The damage from banefire(the spell) is typically so great that units do not survive it. I have seen horrors die to it in 1 round.