You need to hit both "Lite Lock" targets to get the "Lock" arrow to light up. Once you hit both and the "Lock" arrow is lit, you can lock a ball in Gene's mouth.
The hard part to describe is this... Like I just said above, hit both "Lite Lock" targets to get the "Lock" arrow to light up. Even if you don't get the ball into Gene's mouth, you can hit the two targets again to stack the 2nd lock. Then again to stack the third. However, you cannot hit the left target 3 times and then the right target 3 times. You have to hit each one, then it resets to let you hit them again. I hope that makes sense.
As far as getting the ball into Gene's mouth to light the "DEMON" letters, each time you get the ball in there, a letter lights up. Light all 5 letters and the "Lock" arrow with light up, regardless if you hit one or even none of the targets.
Spelling "DEMON" also helps to increase the jackpots during Demon Multiball.