I initially used to think that Lucifer created an entirely different species called demons and they were different from a ghost or a spirit--which are one of the options for the afterlife of a human soul in Supernatural. But, as it turns out, in some of the episodes, demons are portrayed to be pretty afraid of getting their bones burned--which is a rather signatory rite to eliminate the ghosts and the spirits. It necessarily means that human souls can somehow be converted into demons after their death as humans, particularly, if they have signed a deal with any demon during their life. How can a human soul be transformed into a demon? Shouldn't they be fundamentally distinct and non-interchangeable? If they are not, are there any subtle differences between the demons who are created from human souls and the demons which descend directly from the demons created by Lucifer as a distinct species? Or, are all demons essentially created through a transformation of human souls?
2 Answers
I also thought the same until I saw the season 3 episode 9, called "Malleus Maleficarum". During the final part of this episode, a very interesting conversation happens between Dean and Ruby (the demon that helps the Winchester brothers during the season 3). At the time, Dean was doomed to die and stay in hell (because of his crossroads deal) and Ruby tells him that:
Most of them [the demons] have forgotten what it means, or even that they were. That's what happens when you go to Hell, Dean. That's what Hell is – forgetting what you are. Yes, the same thing will happen to you. It might take centuries, but sooner or later Hell will burn away your humanity. Every Hell-bound soul, every one, turns into something else. Turns you into us. So yeah. Yeah, you can count on it.
And then she explains that she retained some of her humanity, and that this is why she helped them.
And like revenant says, there is a difference between ghosts and human souls. Ghosts are human souls that refused to move on or were unable to move on.
theres A line somewhere in the earlier seasons that says something along the lines of Lucifer "twisted and tempted" Lilith's soul into the first demon
demons are the corrupted souls of humans that went to hell for some reason or another but not every soul in hell gets the offer since theres probably an initial exchange of power involved and that power most likely comes from other souls
ghosts however are souls that refused or for some reason were unable to move on (or a mental imprint I think theres a continuity snarl with ghosts)