In Season 1 Episode 50, Percy seems to summon the dark demon that was in him before when staring down Craven Edge to get Grog's soul back. I thought that he had been separated and freed from the dark influence back with the Briarwood arch, but it seems now he still has it. Can anyone explain?
Percy is still able to cast hex and manifest some of the powers seemingly granted to him by Orthax after he has broken the connection. In Campaign 1 Episode 57, Percy casts hex on himself for his walk home, which might be one way he could achieve the smoke manifestation effect, since his hex was defined by the black smoke. In Campaign 1 Episode 40, when Percy attempts to cast hex after having separated himself from Orthax, Matt refers to the scar left on Percy's soul by Orthax as the reason he still has this dark connection and can still cast his magic (see below).
It seems that as long as the shadow entity has been within you, though it is no longer bound to your weapon and yourself, it did leave some dark scars on your soul.