I'm not planning on having them allying yet. Like I said, Demona doesn't know a thing about the Witches and she is incredibly paranoid.

I just want them to at least meet. Demona will not attack her, as matter of fact, she will probably get out of her way so the Witch can do... well, whatever Witches do when they are attacking Death City |=

Not to mention Demona is pretty much there simply to watch humans getting eaten alive by zombies, so there is that (of course she is also fighting zombies and nasty bugs but that's only if they bother her).