In Broken Circle they had the mages locked behind a door in a tower. They were waiting for reinforcements so they could go in and kill them all. Therefore, I think it would have been possible to do the opposite. =D And I draw my inference that detecting demons isn't that hard because Anders, an abomination and a mage, is probably the closest thing to an expert Thedas has on the subject.
And yet everyone pretty much states the opposite.
As for Wilmod... I thought a forceful possession caused the host to become obviously disfigured?
Nah, depends entirely on the demon. Uldred was forcefully possesed too.
According the Dragon Age wiki, Wilmod transforms into a shade and a shade, according to the wiki, is thought to be a demon in true form as it appears outside the Fade or the spirit of the dead that returned. There's also mention in the wiki that some scholars believe a shade's confusion in the world leaves them unable to possess the living or dead. So... very confusing canon there.
Yup, someone dropped the ball. Whoever was designing that encounter probably thought shades look cool as enemies.
One of the biggest mistakes I see people making when something like that happens is that they try to come up with complex explanations or theories to explain it, when the simplest answer is "some dun fukked up!"