The prison was created at the insistence of the Valkyries who said that the dungeon needed one for keeping criminals who have committed crimes so heinous that even death was forgiveness for them.
For the first time, all the Valkyries were of the same opinion. Even Annette who he created to be the most sensible and smart out of all, didn't want to budge down from this matter.
Thus with them insisting so much, Simon had no choice but to create an underground prison just below the training floor. Although keeping these already pitiful demihumans in those dark gloomy cells was a little offputting, Simon had no choice for now.
Keeping them on the Main floor was out of the question, as for the forest spirit village, he couldn't say with a hundred percent guarantee that these demihumans who had suffered so much, wouldn't suddenly snap on innocent the forest spring spirits.