Wild demon, by the way, in an extreme situation (7)
I believe the answer is:
endmost
'an extreme situation' is the definition.
(I've seen this before)
'wild demon by the way in' is the wordplay.
'wild' indicates anagramming the letters.
'by' says to put letters next to each other.
'the' becomes 't' (the is pronounced as a 't' sound in some dialects).
'way' becomes 's' (Compass direction - South).
'in' means one lot of letters goes inside another.
'demon'+'t'='demont'
'demont' is an anagram of 'endmot'.
'endmot' placed around 's' is 'ENDMOST'.
(Other definitions for endmost that I've seen before include "final" , "Farthest" , "Furthest away" , "extreme situation" , "Last in the line" .)