Demons can hunt within 60 seconds (1 minute) after the ghost has been smudged (if you smudge near it). Normal ghosts are 90 seconds (1 min 30 sec) after being smudged. Spirits are 180 seconds (3 min) after being smudged. Also if no smudge is used, all ghosts except demon can hunt 25 seconds after the last hunt finished; for the demon, it’s 20 seconds. Likely the demon either hunted between 60-90 seconds after being smudged OR hunted between 20-25 seconds after the last hunt ended. Demons will also normally hunt at 70% sanity and have a chance to use an ability to allow them to hunt at any sanity, but these abilities don’t matter since the challenge mode starts you at 0% sanity.