"The Wraith of the White Gate 白门恶鬼 (bái mén è guǐ)"
Why is he a Demon:
The white gate was where Lu Bu ultimately might his death under the hands of Cao Cao 曹操. In all fairness, Demi-God Lu Bu is awesome enough and there really is no need for this watered-down version. I guess in this case he is demoted from Godly status down to a scary, but not lethal, ghost. It does not help that he looks like a purple cockroach dressed for a heavy metal concert. Yes you can probably tell that I seriously do not have the answer to this question of why he is a demon.