In Kundalini Yoga , the point of the exercises is to release the "snake" (demon) curled at the base of the spine. So, yes I think a demon can inhabit and be limited to a particular part of the body. I'm not vouching for anyone, just commenting.
I think the idea of these eastern religions (which is what yoga is part of) is that when you get to a certain point in meditation expertise, you are in effect opening yourself up to possession of some kind. The base of the spine is associated with reproduction, life and happy energy so the devil gets these people to worship their bodies and their health, through meditation. Every major pagan relgion has always worshipped repoduction in some form (freemasons, hindus, new age, eastern mysticism, etc) because this is the essence of satanism: the worship of nature, the body, and the glorification of man.