Do the other council quests work properly? The wizard quest is very short, as is the orc quest if you have already cleared the orc camp in south east Rivertown. Next shortest would be the lizard quest.
If you reload a save before scrying for all the council members and just do them one at a time, does that make any difference?
Does Demona speak at all? If the cut scene conversation starts, try clicking the 'x' to exit, if you can, rather than continue.
Does how you approach make any difference? If you proceeded slowly to take on the orcs a couple at a time, try rushing Lanilor's house, and vise versa.
Did you try to enter Mardaneus' house by clicking on the locked door? That shouldn't be required, but try it if you didn't.
Try deleting all of the files in the '..\Divine Divinity\Run\Dynamic' folder.
This folder is used as a cache for the game. Files are created / copied there from the save game folder when you load, and written / copied from that folder when you save a game. The files will be re-created as required the next time you start Divinity. If there was a corrupt file in that folder, deleting the files should fix the problem.