If you don't want any of your party to turn on you as ghouls, you must have some dispel arrows/spells/scrolls, because the Tanar'ri casts death gaze regularly, and any member stricken will slowly die, then turn into a ghoul. If you see them dying, dispel is your only hope -- potions don't work.
Tactics: you MUST concentrate on the head disciple first, because she's a spellcaster who will cause you grief, then concentrate on the remaining disciples -- ignore the Tanar'ri for now; do not bother with buffs, because the Tanar'ri also dispel those; summon, summon, summon, to keep the Tanar'ri busy while you deal with the disciples; when the last disciple is dead, concentrate on the demon. All of this is because when you kill it, the demon jumps into any live disciple.
Tell me is the final boss of the main quest harder than this Demon of the Dagger, my fighter protaginist Argronok is level 8 and has plate mail+3, long sword+2, etc.