I think the notion that one act can make someone evil, to be a tad crazy. Sure you have the back story of the soul selling and such, but I think infact saying selling your soul is an evil action is a bit much. If you view the entire thing in black and white, I still do not see it as exactly evil. Lets look at this under the light of everyone is a sinner, they lie, or maybe steal, they do things that they feel migt be wrong or know are wrong, yet justify it in their own mind in one fashion or another.. its 'ok', or I won't do it again, etc.. Then that becomes the black side, and the white side becomes the struggle to not do these things, to do better, to improve yourself, and maybe even help others in the process.
Now, I can see selling the soul making the character damned. Maybe, even making it more morally flexibile. I personally think its the actions that follow, which are the deciding factor. As far as if he should go Evil after the daggers use, I think that depends on how it happens. If the player actualy murders one of these 'Evil' people, then of course I can see it causing a shift. If he happens upon one who is slaughtering innocents, or attacks him or his friends with lethal force.. then I don't see it as anything more than killing any other evil. The character still in escense furthering the cause of good. If you say hey "the guy could still be redeemed, so its still evil" you open up a huge can of worms then. Any time the players kill something with a soul for whatever reason are then being evil. If you want to use some biblical reference for this sort of thing, look no further than the story of David. He sent a woman's husband to die, so he could have his wife. Was that an evil action? I'd say yes, but did it make him utterly 'Evil'? I'd say no. Sometimes even good people do bad things, but that doesn't stop them from being good people, it just makes them human. Anyway, thats my point of view.