You don't summon a demon with the amulets. If you use them at the statue in the centre of the derelict tunnels (well lit with a potted plant on either side of it, in a room at the top of some stairs, with one side of the room being made of metal bars or a grating) you get the talisman of the north (and other random stuff in the chest that appears), which has +2 Wisdom, 3 enchantment slots and a couple other random bonuses.
You do not meet Belegar on sentinel island, that I recall. After each of the challenges at the various shrine thingies, you can meet him again where you first encountered Talana.
Another encounter in Broken Valley can have you teleported high above Needleman's storage area, though you can not get the password until after you have the battle tower.
You at least come across some of his handiwork in the fjords after getting the battle tower, but I don't think you meet him again.
You can either kill the chicken (there is an achievement for that) or do nothing. There is no way to undo the soul forge, or even bring him the chicken (a white chicken in Belegar's nearest shrine).
