I loathe questions like this. Not just because of “lol” and “pwned,” though those aren’t doing you any favors.
We get a lot of questions that boil down to, “how can my character win against vampires, werewolves, demons, or the cyrokinetic, space monkeys that took over the med-sci annex.”
The problem is, “demon” is a basically meaningless term. Unlike most kinds of monsters, you can’t really narrow this one down. Demon could range from an ill-defined monster, to the former agent of a monotheistic deity that was directly responsible for creating the universe your characters live in.
Bonus points in that we’re talking about a “powerful demon,” which is exactly as meaningless. Powerful in comparison to what, exactly? More powerful than a talking rat with glowing red eyes, but no other supernatural powers?
If you’re talking about demons of the fallen angel variety, then there’s a pretty decent chance nothing your character can do will affect it. Something directly involved in writing the laws of physics, and capable of entering or leaving the world on a whim probably isn’t going to be particularly impressed with your right hook, or a nuclear detonation. This is assuming it has a physical form at all, and isn’t simply a possessing entity.
If it is a disembodied spirit that possesses its victims, there’s not much your character can do to harm them. Especially if the demon can jump bodies on the spot. At that point all your character can do is hurt their friends, while the demon messes with them. Or, end up getting possessed themselves, and watching as the demon murders their friends and loved ones.
If you’re talking about a physical being that ported in from some kind of exothermic afterlife, then sure, your character might be able to do something. Especially if you just mean, “powerful” in the physical sense. Of course that kind of a demon could easily be enormous.
It really depends on your setting.
So, what can your character do? Get his teeth kicked in. Outside of games, demons are almost never about piling on more force. They require your characters to be more intelligent, more cunning. It’s a creature you can’t punch, or chainsaw to death. You probably can’t outwit it. Your character needs to be careful, and look at the situation they’re in. Also, possibly, the exact moment your villain completely loses control of the situation… assuming they haven’t been a demon the entire time.
I’ll be honest, I’m not a fan of heroes who survive based on the villain’s largess. Maybe it’s just that I don’t have the requisite supervillain mindset (or actually read a few Evil Overlord Lists). I mean, honestly, if you’re a maniacal supervillain who refuses to off the hero, you’ve no one but yourself to blame when they inevitably come up with a last minute plan to foil your schemes. If it was me, I’d just wax them and be done with it. Nothing good can come from letting a hero wander around your territory making little messes.