What's funny/suspicious is that they don't seem capable of telling the difference between the two.
Just speculation, but...
Most people wouldn't know what the sword would look like, and as a genuine "divine weapon" it would exude a very strong aura to almost everyone seeing it or coming near enough.
This is not one of the "demonic miasma" world settings, and the Demons, other than being a different race/species/culture aren't that much different from humans, so the sword would simply be a divine weapon blessed by
A god.
Just from the other side of the Pantheon of this world people assume in this case..
Because the sword could
in no way be the actual divine weapon the Demon Lord wielded... right?
Could even be that even mid-tier priests cannot divine the specific deity who blessed the weapon, other than that the weapon
is divinely blessed , and it isn't
their Deity whodunnit.
Which is why a priest of serious status of the specific assumed deity has to head up for confirmation.
( This is a trick I used in both DnD and LARP in the past to..... entertain.... my dear
powerhungry players...
I am, most likely, not the only DM/GM who used it to.... predictable effect...
Funny how careful players become around things with very strong enchantments/auras, divine in nature or not.... 😇😇😇 )