I have a question

It's Set's consciousness who is obsessed with Hugo, not the demon.

yes, but the timeline doesn't much... Wasn't Set born after Hugo's daughter gone missing? Since he started the whole baby soldier making after she disappeared. But according to the demon he was the cause of the daughter disappearing and the mother dying... At least that's how I understand it.

The family is known for taking down demons/monsters. So his aim was to take down the family head and let the rest crumble. It's why he's doing this alongside his own plans

It's because his family is the strongest especially when it comes to killing monsters and demons. You know the saying "when you cut the head the body will crumble". In other words Hugo is the head and the body is the community. Him killing the wife and getting rid of the daughter caused Hugo great grief to the point it became easier to manipulate him. In turn Hugo became cold,ruthless, and feared. The grief he held turned into vengeance. The demon easily manipulated him to believe that the barbarians were at fault for kidnapping his daughter. Cause the Barbarians are strong people who also can kill demons and monsters. However, Hugo clan is a bit stronger so Hugo clan wiping them out bam don't have to worry about them anymore nor a potential alliance. Killing Vikir is because he was 1 of the strongest warriors Hugo had he was a faithful,loyal, strong, and smart warrior. So he had to also go. So taking away all of Hugo strengths will leave nothing but weakness. Which in turn was great for the demons to come back and rule. Vikir stated they demons came and conquer quickly. That's what I gathered

From what I understand, it's the demon's doing, not Set. So the demon possessed someone else, to get Hugo's weaknesses. Then, after the other children are born, the demon possessed the one who is the most vulnerable and closest to Hugo's side- hence Set. To bring down the family once and for all.