The magic sword at lvl 1 can only kill monsters and demons, so yeah those guys were possessed. Though MC realized that, he still left them to die because they killed Lidd's parents. Way different from the manga where he looks dumbly at them running away.
That magic sword gives Skill points when it cuts demons, and for now it can't kill humans, and at level 2 it becomes a Bow. It's just my guess, but I think that's the reason the Goddess keeps sending people there, to stop the demons' plans.
After the 3 guys, MC didn't kill anyone yet, since they only keep coming after him inside the city, so he just break all their bones. So only 3 human deaths for now.