Yes, the one thing Modinaram shouldn't have done, but of course he did. Technically he should have been aware of the magic reflection since he absorbed the sealed demon lord who had experienced fighting Diablo, but since the personalities are diluted during the fusing process, the information was lost entirely. Modinaram didn't know the first thing about Diablo.
All demon lords have one signature power, Diablo's is that 100% magic reflection. As soon as Diablo called himself a demon lord, Modinaram should have expected something. Though it still might not have helped him.