From previous experience, I was familiar with people going insane, mainly personal experience.
The time I was stuck with Servant Mao taught me how a human's soul can become corrupt slowly and surely it will turn darker and darker until it is fully consumed or until the main soul suffers a mutation of sorts, and that mutation causes the soul to separate itself from the corrupted part.
This isn't good at all though, although it's basically cutting the toe to save the foot, it doesn't mean that it is harmless to a person, because cutting away a part of one's soul doesn't come without consequences.
Here the consequence was obvious, it was the creation of the heart demon, and in that creation, there was separation.
The old man separated his soul in two, but with that lost or gave up his memories of the past, the memories were then put in this severed soul and created the heart demon that is haunting him.
