To go to the example you picked out: the demon worshipping theocratic culture is bad because THEY WORSHIP DEMONS. This isn't modern Church of Satan which is a pisstake at other religions, they are active in serving the literal embodiment of evil and spreading misery and destruction. Is that not evil, or are we back to "demons aren't evil either" territory?
I think it's close, but not really that. In real life, people having a stance in religion are often accused of holding evil beliefs (Christan by pagans during the Roman Empire, then Pagans by Christians during the same Roman Empire, Catholics by Protestants and the other way round, Atheists nowadays in countries were a religious orientation is mandatory/socially expected, Muslims nowadays by association with Al-Qaeda terrorists and non-Muslim by said Al-Qaeda terrorists). If you create a setting were it is true and justified to hunt and kill people on the basis of their religious beliefs, because, in setting, they have really chosen to worship an evil entity seeking to make everyone miserable, for example the God of Violent Murder, you create a setting were one of the most common source of prejudice on real earth is true and justified. Some people no longer want that. You could say they are justified, in setting, to do that, but some don't wan't to even consider an in-setting argument and a strong distanciation between entertainment and real-life endorsing of a belief. (Unless I am mistaken, on this very board there is a member that is offended by the Wall of the Faithless and the fact that it is objectively right to be theist in FR, because he was discriminated against on the basis of his atheism: it's easy to see why he wouldn't want to play in the FR).
Same with racism: Black People are the subject of real-world racism, so if in your setting, you have a black-skinned race that is evil, either because they are genetically evil, but even if they are just part of your regular Nazi society, to the point that it is justified to kill them based on their skin color (hey, look, a dark elf, he's probably supporting Menzoberranzan, no need to ask him, let's kill him), it is distasteful to some. Because you justified killing people based on skin color (even if the color you chose was red or blue or something equally fantastic). Which is wrong in real life, and this make it wrong in all their entertainment, because they choose not to draw the limit at this level.
Having "most X" supporters of an evil society doesn't solve the problem in this case, because "Most X are bad people, except John, my X friend, which is fine" is a very common defense used by racist to "prove" that they are not racists. "Most Menzoberranzan are bad apples" is very much like "Most Mexicans/Germans/Americans/Iraqi/any other nationality are bad apples": not a line of thought some would want in their entertainment. And I am not saying that anyone having a setting where most people support a morally reprehensible regime is morally at fault himself, I am just describing that not everyone draws the line of acceptability at a different point.
Edit: to clarify that the Mexicans were just an example, not that there are similarity between drow culture and mexican culture.
Everyone draws a limit. I haven't seen James Bond movies being criticized because the hero break the speed limit during chase scenes, while smoking and drinking heroes have gone the way of the dodo in Hollywood. Sometimes the limit is difficult to establish: should the need to protect children from porn really necessitate the removing of a teacher's Facebook account mentionning Gustave Courbet's L'origine du Monde? Both sides of the Atlantic ruled differently on this question. The goal of any company is to improve its market share and try to provide entertainment compatible with the limit of most customers, alienating the less potential people, not making moral choices by itself.
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