You're not supposed to defeat Demoness in 'Forgotten Keep'. You must lose to her at least once in order to progress the story. Once you let her defeat you, she is going to move over to a new area called 'Keep Chambers' and will allow you to explore Forgotten Keep freely and fight Dark Knights.
Enter 'Keep Chambers' once and another cutscene will occur, after which you can try and defeat Demoness with no repercussions. She will give you the Darkbomb spell but still remain there for you to Talk to or defeat infinitely.