Once again dipping into the RW, the chivalric code, inspiriation for the paladin's code, had a strong clause regarding mercy. It was one of the higher virtues and was, in some sense, the quintessential knightly quality.
HOWEVER, the requirement for mercy was usually interpreted to mean that mercy need be extended
to Christians only. A pagan, a Muslim, atheist, lapsed Christian or other non-Christian could be dealt with as the mood struck- mercy to those persons was optional. It is quite unlikely that most knights would see anything wrong with slaying a known satanist, regardless of conditions.
And, once again, other similar codes can be found in other religious fighting orders of the RW, and once again, those codes limit
required mercy to the true believers. Non-believers gambled with their lives when relying on the mercy of such holy knights.
There were limits, however, even to this "open season" on evildoers. There is a concept called the "City of Refuge" in which a city may grant refuge to a person who has comitted an evil act- even murder- and that person could not be brought to justice by those outside the city. Essentially, the criminal's life was spared, but he was doomed to live within the boundaries of the city the rest of his days. And if he comitted a crime within his City of Refuge, all bets were off. While it was a law that was religious in origin, it was commonly adopted as a traditional "law" in many European countries.
Similarly, some faiths could also offer "Sanctuary" to those who sought it. Again, this was conditional, and usually only extended to members of the same faith.
The analogue to this concept in D&D would be found in that phrase in the PHB on p105:
Alhandra, a paladin who fights evil without mercy and protects the innocent without hesitation, is lawful good.
As long as that paladin considers you evil, your life is in her hands. Such a one might require a concrete act of good (or in this case, genuine repentance)- and remember, they can
tell- to suspend a judgement of death.