This was all very confusing for the guards. These were guards who were used to dealing with petty crimes among the villagers and hunting down wild beasts who became a nuisance. This demon had been in the category of wild beast in need of hunting until this small girl intervened. Now that Naoto was engaging in reasonable negotiation, the guards had been completely thrown. After listening to Naoto's plea of innocence in stunned silence, one was about to raise an objection when Emily brought up something about compensation in the form of spiritual assistance.

"Wait, pardon?" one guard blurted out. The rest of them spoke up as well, and a discussion ensued.
"She said she'd give us compensation in the form of spiritual assistance."
"I heard that, but what does that mean?"
"It appears that she's trying to pay us back using some sort of augmenting magic."
"So she expects us to just let this guy go?"
"Wait, maybe she would be able to help us."
"No, no, no, it's the principle of the thing. We can't let people go around doing this stuff and getting away with it."

They huddled in closer and discussed more quietly among themselves. They soon reached a verdict. One of them stepped forwards, cleared his throat and answered to Naoto.

"Although you may rationalise your crimes, you are still guilty of them. We demand the immediate return of the family and the stolen goods. Also, since you have shown that you are capable of rational thought we are placing you under arrest until we can get a higher ruling on your charges, as well as," he added, gesturing to Emily, "whether your offer is acceptable or not."

Despite the clarity of the speech, the guards were still slightly nervous. Naoto was still bigger and stronger than them, and he had a reasonably intimidating sword. Plus there was the wild-card of the young sorceress, who could act either way in their eyes. If negotiations turned sour, there was always the hope that the demon's skull wasn't bulletproof- a well placed musket shot kills most beasts smaller than a horse. But considering recent events, they hoped it didn't come to that.