This fight was a nasty one, and the players didn't enjoy it very much. I am running this campaign for three of my players; Catfolk monk (martial artist), aasimar sorcerer (celestial bloodline), and an aasimar oracle (seer). The oracle rolled very well to know most of the abilities of the quasit, including its vulnerability to cold iron. However, they were lacking funds, and weren't sure when they might come across Erylium, so they didn't go out and buy any cold iron weapons. None of them really favor using a weapon anyway, which helped them make the decision to not go shopping before hand.
When they met Erylium in the temple, she summoned a sinspawn and some other critters (all of which didn't last long to the monk and the sorcerer), but the characters didn't have a good means of hurting her. The sorcerer was able to do some damage, all of which was holy from her bloodline power, so Erylium couldn't regen that. Still, it wasn't nearly enough to kill the quasit, and things didn't look good.
I knew going in that they'd unlikely be able to kill the demon, and decided that if they mucked around with the pool in anyway, that they'd get a Sense Motive check to notice the quasit's reaction. The catfolk monk rolled a 20 on that check, and knew right away that this could be a key to killing the demon. He then proceeded to do all kinds of things to the pool, which continued to enrage the demon. Eventually, someone activated the pool with some blood, which created another spawn, and sent Erylium into a killing rage.
By the end of the fight (which went on for all told about 2+ hours), the sorcerer and the oracle had both dipped their hands in the pool, and both had failed their save and were filled with wrath. Erylium had got close to death, and ended up fumbling and attack that ended up stabbing herself in the chest (to be finished off by the monk). One of the players actually joked that the quasit had stabbed itself in the heart just to end the fight.
Everything else in this adventure so far has gone very well, and i knew going in that the quasit would be bad. If i was to run this encounter again, i'd probably change a few things just to make the fight more fun, though not necessarily any easier.