1. Open device manager (SCSI/RAID Controllers section) and delete SCSI controller with name corresponding with name of Daemon driver (miniport driver name). If you have problems doing it (eg. system crashes) then start from step 3 (skip steps 1 and 2).
2. Open device manager (System devices section) and delete device with driver corresponding with Daemon driver (bus driver name). In current versions of Daemon Tools it is 'PnP BIOS Extension' but most likely it may change in next versions. Again, if you have some problems doing it, skip this step
3. Find Daemon driver files in Windows\System32\Drivers folder
(in Win95/98/ME also check Windows\System\IOSUBSYS folder).
Make sure your system is configured to display system files (ControlPanel->Tools->FolderOptions->View) in order you can see them. Delete Daemon driver files.
default v3.46 driver file names are d346bus.sys and d346prt.sys
default v3.47 driver file names are d347bus.sys and d347prt.sys
4. In WinNT/2000/XP/2003 open registry editor and check HKEY_LOCAL_MACHINE\System\CurrentControlSet\Services for entries with same names as Daemon driver files. Delete these keys.
5. Reboot your system. If you executed steps 1 and 2 then you don't need to do anything anymore. Otherwise proceed to next step.
6. Go to device manager - you may see some device with yellow mark.
This is most likely Daemon device which cannot start because it's drivers are deleted. Delete this device from Device Manager.