No, it doesn't hurt infernals. In the civiliopedia, you can check to see which units are 'type' undead. The most important are probagly spectres, skeletons, diseased corpses, wraiths, and the Sheaim pyre zombies (probably a few more I'm not thinking of off the top of my head). Note that the Calabim vampires are NOT undead in FfH.
So the spell is really important in fighting someone who has gone deep into death magic or against the Sheaim, and sometimes against the Ashen Veil. Note that although destroy undead doesn't hurt vampires, vampires summon spectres, and it helps agaisnt the spectres.
Best wishes,
Breunor