The writing was overall better than the previous one, but I am deeply troubled by the painfully overused manner of his parent's deaths.  We shall see...

I was slowly starting to wake up when my senses started to perceive the smell of burning wood and crackling wood.

"burning wood and crackling wood", not a good phrase.  I'd recommend "wood burning and crackling" instead. 

Outside, there was yelling and the sound of metal striking metal. It was the sound of battle.

Unnecessarily wordy, use a semicolon instead of a period, leave out "it was", change "there was" to "I head", and take the first "the sound out.  End result" Outside, I heard yelling and metal striking metal; the sounds of a battle."

The now was all I needed to know at the moment.

You can leave out "at the moment", it's sort of implied. 

I could see smoke raising into the night sky, and the night was illuminated by the flames.

First of all, with the "I saw" in the previous sentence and then "I could see", here.  We don't need to be told that he's seeing all of this, it's implied in the fact that he's describing it at all.  so maybe "Smoke rose into the sky, and the night was illuminated by flames". 

To my right, a Sorcerite was fighting a pair of armored demons. They were not of the same breed as us. They were too far away and it was too dark for me to make out the details. But they both stood a foot taller than the Sorcerite.

The first and second, and third and fourth sentences here can each be merged. 

That dagger of worry that was in my gut suddenly twisted into fear.

At least take out "that was", and prefrerably "in my gut" as well.  We know where the dagger is, you already said, remember?

The two demons overpower the Sorcerite and struck him down.

That should be "overpowered" past tense. 

My mother pulled my arm and pulled me to away from the scene

You've said "pulled" twice here.  Perhaps she "grabbed", "grasped", or even "seized" his arm instead?

The two demons notice us and headed towards us. We were trapped.

First of all, you've already referred to them as "the two demons" once, so this sounds a little repetitive.  Second, "we were trapped" shouldn't be its own sentence. 

Mother pushed me aside and drew her daggers.  With speed I only caught glimpses of she drew her daggers and ran towards the demon.

You said "she drew her daggers" twice, I'm assuming that wasn't intentional.  Also, you can say "it" more, and "the demon" less, we'll still know what you're talking about.  It gets a little annoying reading "the demon" this and "the demon" that, all the time. 

The archer fires, but Mother cut the arrow in two with her dagger with a single slash.

"Fired", past tense.  Probably a typo, ne?

It seemed like every Sorcerite in the village were fighting.

Either "all the Sorcerite's were", or "every Sorcerite was".  I think...

I could sense pure evil radiating from him,

Sense in what way? Is this a special perceptive ability kind of sense, or more of a "gut feeling", type sense.  I realize it's not gonna change how it's written either way, but I'd like to know what you mean. 

Ok, you are aware of how painfully stereotypical this is, right? Having him be responsible for the deaths of his parents.  Be very careful with this; you had better have a really original twist on this. 

Ben slid into the pit; kicking up dusty dirt.

Since you use "dirt" in the next sentence, how about he just kicks up dust. 

Hey Joseph --

It's nice to see how tight this chapter is. You give us action at the beginning and it sucks the reader all the way through. Enough opening remarks -- critique time!

I heard Mother said urgently. ”Come on, wake up!”
 

I could be mistaken, but I think the proper way to phrase what you mean here is "I heard Mother say." It seems to flow a bit better in my mind.

Now this fire brings up a couple of interesting points. We your readers know that Draco is half demon. But you've not really told us anything about what that means in terms of senses and abilities. Since he's a lupine demon, can he smell much better than a full human? Also, we don't know much about your world's cosmology or mythology. In typical Christian/Western imagery, demons are associated with fire. Satan is the ruler of the lake of fire and all that. So, is Draco as a half demon able to withstand fires better than others? This fire might be a good place to explore some of these points.

Bahaumut wasn’t back yet.

I don't know if this is really necessary. You've already highlighted that Draco and his mother don't know where Bahaumut is. This sentence is a little speed bump that slows down the pacing. If you cut it, I think the pacing will feel a lot tighter.

It had happened.

This sounds like the incident is a little abstract to Draco. This seems like the worst-case scenario, so maybe using more descriptive language to replace this sentence will spice it up more.

The two demons overpower the Sorcerite and struck him down
 

"Overpower" needs to be past tense rather than present tense.

This also brings up how demons feel about the idea of intermarrying with humans. Maybe some dialogue between his Mother and the other demons during their combat would provide a clearer picture of this social aspect.

Another tense issue here:

The archer fires,

Fires should be fired. And technically, since there's no explosives involved with bows and arrows, it should more likely be "shot."

Fiona screamed.

I had to think a moment to remember that Fiona is Draco's mother. Maybe consistently calling her "mother" rather than Fiona would be appropriate, especially since it's in first-person. I hardly call my mom by her given name, especially in telling other people about her. I remember one time when my dad and I were out to dinner and he casually referred to her by her name rather than "mom." It really threw me for a loop. Unless there's a deep-seated cultural or psychological reason, I think just calling her "Mother" in descriptions would be fine.

He quickly sidestepped and knocked me away with the flat of his blood red long-sword

I'm just wondering, is the sword blade actually colored blood-red, or is it stained with blood? Maybe those adjectives could be a bit clearer.

Ben slid into the pit; kicking up dusty dirt.
 

"Dusty dirt" seems to be a bit redundant and repetitive . Just pick one.

Good work! I'm really enjoying this story. I'm looking forward to the next installment.  

At first, I was going to shrug her off like I did every morning when she woke me up for school, but there was unnatural urgency in her voice. 

This really needs to be shortened into at least 2, maybe 3 sentences. Here's an example,

"At first I was going to shrug her off like I did every school day morning. However, she had an unnatural urgency in her voice."

Sleep was gone. I was side awake and aware now. Confusion still gripped my senses, but I had it under control. It was like starting a book halfway through. I knew what was happening now, it was just the in between that was unclear. But that could wait. The now was all I needed to know at the moment.

This paragraph feels a bit clumsy. The way it reads is confusing. It has a circular logic to it, and it's throwing the reading off. You need to rework this.

It had happened. Demons had attacked the village. We had always believed that they would never come. Our village was too small for them to take notice of us. But we were wrong, and now we were paying for being so naive. That dagger of worry that was in my gut suddenly twisted into fear. In order to get to the village, the demons had to have come through the same forest Bahaumut was supposedly at. Had they found him? Was that why he was not home? No, they couldn't have killed him. Bahaumut would not go down so easily. He knew enough magic to make a good escape.

This entire paragraph is too clumped together. You could make at least two, maybe three, paragraphs out of this.

I see more action in this chapter, good, but I feel as though Fiona's death was a little too quick. Earlier you show her to be expertly skilled, and to have to go down so easily just doesn't strike true to me.

The ending confuses me. I'm not sure what to make of it. I don't see the connection between the beginning of chapter 1 and the ending of chapter 2. I hope chapter 3 further explains these things.

A lot of what I talked about in the first chapter I see here, too. Basically don't try to jam so much information in (I've had that trouble, too). Watch how you structure your sentences, especially word usage.