Daniel was just bluffing. In order to extract one's soul and peer into their thoughts, a death mage would have to be at least above grade-8 to just barely do it. Daniel was just a grade-5 death mage. He had methods to torture a person's soul, but he would not be able to obtain any accurate information.
The two prisoners were clueless about magic, so they believed Daniel's words. If they held out but the enemy still managed to acquire information, then they were simply troubling themselves. Even if Daniel did not frighten them, the two scouts would have also pissed their pants due to dozens of mages surrounding them.
