I also cleared out both the orange and red factions. First, I defeated the demon, and then the red faction attacked me – I don't understand why. So, completing the quests without capturing their cities didn't work, but I think it's for the best. In terms of difficulty, this is the most challenging and interesting one so far. I'm playing on normal difficulty. I still don't understand why the red faction attacked me; I captured a medium-sized demonic castle, and then they came after me.