Datuk Tan Cheng Leng:
Then I shall charge in and engage the spawn of the devil!
Small technical correction: She's probably not 'the spawn of the devil'. Wrong theology for that, if I am right in my theory as a player.
The woman in question is probably possessed by a demon of some sort, given she's wearing the appropriate outfit for being a follower of the local Queen Of Demons.
So if anything, she'd be the minion of a demon, not a devil.
The darkened eyes may a symptom of an eye disease unknown to Hanako, but given the number of folktales told of encounters with strange black eyed people met in the wilder places of the world, that seems unlikely in this case.
It might also explain why the woman with the dagger is apparently not paying much attention to the pain of the wound she has been dealt, or the weakening effects of the spell Hanako threw at her before.
However, it doesn't mean that Hanako wants her dead. Possession by demonic forces is said to be more often a temporary state than a permanent one.
Kill her body and the demon may not stop possessing it. After all, there'd be nothing human in spirit left in a corpse to fight it off from fully controlling dead flesh.
Need to get that dagger off her, as it could possibly be the demon's focus to control her. Killing her is a last resort, and may make even make things worse if the party does so.
I could be utterly mistaken about all of this, and making a bunch of false assumptions about what's going on in game, but that's the information that Hanako would be going on IC.