Just read an interesting paper from Dale Martin entitled "When Did Angels Become Demons?" It was a paper I heard him give at the British New Testament Conference in 2008. In brief, Martin argues that most ancient Jews (including the earliest Jesus-believers) did not think of demons as fallen angels but saw angels and demons as distinct 'species' of being.
He starts by looking at which Hebrew words the translators of the LXX thought ought to be rendered as daimon or daimonion. Five or six Hebrew words from the Scriptures were translated in this way. What is interesting is that:
(1) the Hebrew words covered various different kinds of being (goat-man gods; disease-causing gods; abstract qualities that were also seen as gods such as Fate or Fortune). But they all had in common that they were seen as pagan gods that are falsely worshiped. They were all translated as Daimons in the LXX (because the Greek pagan uses of the words daimon and daimonion make it a fitting translation).
(2) the most obvious candidate from the Jewish Scriptures for translation as daimon was the Hebrew malak (messenger) because the jobs that the messengers performed were the kinds of things that, in a Greek context, would have done by a daimon. But the LXX translators never translated malak as daimon/daimones/daimonia. Instead they use angelos (which we render as angel).
So the LXX developed what became two almost technical terms for Greek-speaking Jews and they did not blur the two categories of heavenly being.
Second Temple Jewish Literature
Martin then looks at developments in various Second Temple texts—1 Enoch, Jubilees, Qumran documents, Tobit, The Life of Adam and Eve, the Apocalypse of Abraham, and the Testament of Solomon. Here the picture becomes a tad messier and we do find
(a) a merging of the categories of "evil spirit" and "demon," and
(b) a belief in fallen angels. However, these fallen angels are not thought to be demons. Demons, in 1 Enoch, are the souls of the deceased angel-human hybrids mentioned in Gen 6.
Philo and Josephus
Philo does equate "angel" and "daimon" but he sees both as mainly benign (so they were not demons as we think of them but more akin to what Greek philosophers would have thought).
Josephus never connects angels with daimons and he thinks of daimons in ways akin to popular Greek thinking (daimons as the souls of the dead, etc.).
Similarly the NT never equates demons with angels (fallen or otherwise). No explanation of the origin of demons is given. But there is a clear shift in the Synoptic Gospels to a clear and unequivocal identification of demons with evil spirits.
We also find reference to "the devil and his angels" (Matt 25:41) and the idea that Satan is the ruler of the demons (Mark 3:22; Matt 12:24; Luke 11:15). But the dots are not joined.
Paul sees angels as generally good but sometimes as bad or ambiguous. His only reference to demons (1 Cor 10:19–22) links them to idolatry and pagan sacrifice (similar to LXX usage to refer to pagan deities). But nowehere in the NT are demons seen as fallen angels.
Post-Canonical Christian Authors
Justin Martyr and Athenagoras more or less follow and develop the view of 1 Enoch (demons are evil spirits but they are the souls of the dead human-angel hybrids of Genesis 6 and they are in a different category from the fallen angels, though the latter are also evil).
But with Tatian in the second half of the second century we find the first identification of demons with fallen angels and with Tertullian we find the traditional Christian view set out fully for the first time. It was not a view that gain immediate, universal acceptance by Christians (Lactantius, for instance, follows 1 Enoch rather than the demons=fallen angels view) but it soon became the mainstream Christian view.
That, in brief, is the story Martin tells. The development of the traditional Christian view is a natural and understandable development that builds on elements found within the NT texts and joins them together in a certain way. It also has a certain theological rationalle, not explored by Martin, in terms of trying to account for how evil arose in creation.
But what Martin helps focus the mind on is that the full-blown Christian idea of demons as fallen angels was a development of biblical ideas and not an idea set out directly in the Bible itself. In fact, as far as the evidence that we have can demonstrate, it was not an idea that the biblical authors believed. Not that they rejected it, but it had simply not occurred to them.
Does this mean that the idea is unbiblical or should be rejected by Christians? Not necessarily. It might be a legitimate synthesis and development of biblical ideas. It might have a theo-logic that commends it. There is a case to say that it is "biblical" in that extended sense. But it is not a view that can claim immunity from biblical critique and it cannot take its 'biblical' status for granted. Christian systematic theologians should not feel bound to explore angelology and demonology within the confines of the traditional Christian view and might find fruitful ideas worth exploring in earlier biblical thinking in which angels and demons were two different kinds of creature rather than good and bad versions of the same kind.