Good morning!
I was just experiencing the same issue. However, I checked another forum and they had the answer. :)
Do you have any conversation quests that you haven't done nearby? Like you, I completed the puzzle and heard the grinding noise that said the solution was correct, but the demon didn't spawn. Turns out I had a conversation quest for Bellara nearby that I hadn't done yet. Once I finished it, the demon finally spawned (I didn't have to redo the puzzle), and I was able to complete the quest and get the chest.
Please post if this helped! (and a big "THANK YOU!!" to user "A" on the Steam forums for posting the answer!)
