Now that i read your post in depth I understand what you mean.
Point is that
Iirc the charm tells you that 8% of your total undead + demon dmg is added as IED, not that it currently adds 8% IED.
is what YOU think is the intended behavior of the charm. I don't want to argue, maybe your are right. It is up to the developers to confirm.
Secondly I confirmed with D2 STATS and with MedianXLOfflineTools 'Show All Stats' function that there is no IED added:
State 1: Character has
- NO Passives, charms or items that give damage to Demons and Udead - SHOWED ON THE IMGAGES
- Has no buffs that add IED
Result: both D2 STATS and MedianXLOfflineTools showed that the character has 0 IED - this is expected
State 2: Character has
- Eequiped ONLY
Godhead

Godhead
Hundsgugel (4)
Defense: (97 - 132) to (145 - 196)
(Paladin Only)
Required Level: 2
Required Strength: 25
Item Level: 1
+(31 to 60)% Damage to Demons
+(31 to 60)% Damage to Undead
4% Chance of Crushing Blow
+(11 to 50)% Enhanced Defense
+(21 to 30) to Strength
+10 Life Regenerated per Second
Socketed (2)
Defense: (373 - 464) to (523 - 650)
(Paladin Only)
Required Level: 19
Required Strength: 50
Item Level: 31
+(61 to 90)% Damage to Demons
+(61 to 90)% Damage to Undead
6% Chance of Crushing Blow
+(61 to 100)% Enhanced Defense
+(31 to 40) to Strength
+20 Life Regenerated per Second
Socketed (2)
Defense: (1000 - 1185) to (1379 - 1635)
(Paladin Only)
Required Level: 37
Required Strength: 175
Item Level: 51
+(91 to 120)% Damage to Demons
+(91 to 120)% Damage to Undead
7% Chance of Crushing Blow
+(111 to 150)% Enhanced Defense
+(41 to 50) to Strength
+30 Life Regenerated per Second
Socketed (3)
Defense: (1693 - 1947) to (2315 - 2661)
(Paladin Only)
Required Level: 45
Required Strength: 350
Item Level: 77
+(121 to 150)% Damage to Demons
+(121 to 150)% Damage to Undead
8% Chance of Crushing Blow
+(161 to 200)% Enhanced Defense
+(51 to 60) to Strength
+40 Life Regenerated per Second
Socketed (4)
and
Lachdanan's Avenger

Lachdanan's Avenger
War Sword (4)
One-Hand Damage: (14 - 16) to (16 - 18)
Required Level: 12
Required Strength: 85
Item Level: 19
Strength Damage Bonus: (0.11 per Strength)%
4% Chance to cast level 3 Spike Nova on Melee Attack
+1 to Paladin Skill Levels
+(61 to 75)% Damage to Demons
+(61 to 75)% Damage to Undead
+(61 to 80)% Enhanced Damage
(1 to 2)% Chance of Crushing Blow
+(16 to 25) to Strength
+(16 to 25) to Dexterity
Elemental Resists +(11 to 15)%
Socketed (1)
One-Hand Damage: (34 - 37) to (40 - 44)
Required Level: 30
Required Strength: 125
Item Level: 40
Strength Damage Bonus: (0.11 per Strength)%
5% Chance to cast level 11 Spike Nova on Melee Attack
+(1 to 2) to Paladin Skill Levels
+(106 to 120)% Damage to Demons
+(106 to 120)% Damage to Undead
+(101 to 120)% Enhanced Damage
(3 to 4)% Chance of Crushing Blow
+(36 to 45) to Strength
+(36 to 45) to Dexterity
Elemental Resists +(21 to 25)%
Socketed (2)
One-Hand Damage: (72 - 78) to (84 - 91)
Required Level: 49
Required Strength: 244
Item Level: 59
Strength Damage Bonus: (0.11 per Strength)%
6% Chance to cast level 19 Spike Nova on Melee Attack
+(2 to 3) to Paladin Skill Levels
+(136 to 150)% Damage to Demons
+(136 to 150)% Damage to Undead
+(141 to 160)% Enhanced Damage
(5 to 6)% Chance of Crushing Blow
+(56 to 65) to Strength
+(56 to 65) to Dexterity
Elemental Resists +(31 to 35)%
Socketed (3)
One-Hand Damage: (98 - 105) to (118 - 126)
Required Level: 57
Required Strength: 481
Item Level: 85
Strength Damage Bonus: (0.11 per Strength)%
7% Chance to cast level 23 Spike Nova on Melee Attack
+3 to Paladin Skill Levels
+(166 to 180)% Damage to Demons
+(166 to 180)% Damage to Undead
+(181 to 200)% Enhanced Damage
(7 to 8)% Chance of Crushing Blow
+(66 to 75) to Strength
+(66 to 75) to Dexterity
Elemental Resists +(36 to 40)%
Socketed (3)
which give him up to 330 damage to Demons and Udead
- Has no buffs that add IED
Result: both D2 STATS and MedianXLOfflineTools showed that the character has 0 IED - IS THIS A BUG OR IS IT EXPECTED?