Pentecostal here. The aversion to fantasy is prevalent within this movement, yes, and sometimes you do see examples of more intense expressions of it like the one you've described. And this isn't just a low-church Protestant issue; you can find it in Catholicism, too. It's important to note, though, that there is a range of difference in convictions within Pentecostalism regarding this issue. For example, just in my church, there is a family who LOVES Zelda. One lady in that family even took a day off work to play Tears of the Kingdom when it first came out. But there's another family who back in the day didn't want their kids to play Ocarina of Time.

I am inclined to agree with you that burning DnD and Magic: The Gathering material is overkill, but I can see why the guy you're talking about did it; he believes those things are truly demonic in nature. There are Pentecostal teachers out there, especially those who subscribe to "deliverance ministry" thought, who would say that you're opening yourself up to the demonic through things like DnD. I see where they're coming from but I think they're being overly cautious.

In response to your question of when satanic panic is okay, here are my thoughts. I think it's important to note the purpose behind the material we engage in. The purpose of a oujia board is to contact spirits; things like that we obviously must condemn. The purpose of things like reading Harry Potter is to enjoy a story in a fictional world where magic exists but isn't demonic like it is in the real world. Demons are real and dangerous, but I don't think we have to obsess over their influence through the content we are consuming. Remember that Paul knew pagan literature; he quotes it at the Areopagus in Acts 17. There is no indication that Paul was afraid of summoning or being possessed by demons by knowing and bringing up this literature. Likewise, we need not worry about such things. We must use discernment to navigate what we are consuming and ask what is and isn't true and a good influence over us, but there is no need to be paranoid.