Im having mad trouble with that bloody sloth demon thing, I think at around about from 9000 he finally shanked my last guy? And the worst part is I didn't even want to do this crap, I was just trying to help out a possessed little boy the clean way and end up getting dragged into helping these tard wizards retake there playhouse.
fixing the Circle of Mages is one of the 3 main quests to get help for the war anyway...
I did that one before I went to Redcliffe.
ALSO, during the 'Broken Circle' quest that you don't want to do, all your basic Attributes will get a free permanent boost... if you find all of the bonuses, by the end you will get like +6 cunning, +5 willpower... etcetera. oh yeah, don't go fight the demon until you have cleared out all the different corners of the Fade.. for all the bonuses.
in terms of beating the Sloth Boss, for me it helped a lot to use the Golem Form. pretty sure that Boss casts a lot of Earth spells. if you change to Golem form, you should be immune.. can help you to keep punching and interrupt his spells while your party recovers.