Alicornutopia

Yep, that includes the Forgotten Realms afterlife situation. Veron doesn't agree with the Forgotten Realms afterlife situation, but still prefers leaving people to it over the soul eating sword, because the soul eating sword dissolves souls into nothingness and eventually unmakes them. Veron has been to Hell. Absurdly, impossibly, it's possible to still find redemption there; Veron witnessed that personally. Putting them in the sword removes that chance, and at the very least means that their soul will get seriously mauled before he rigs up a way to extract them and put them in a golem. Worse, he might not manage it. He's not a wizard or an expert in soullish affairs, he managed it last time with some serious help and a lot of luck, that doesn't mean he'll do as well on a repeat performance. They might just be gone, forever, irrevocably. Some people might prefer to risk the chance of oblivion to maybe get to be in a golem with a slightly mauled soul over the afterlife they've earned as evil cultists, but Veron is not comfortable forcing it on people.

And if they prefer actually oblivion it looks like they have a week to renounce the worship of all gods and go on the wall of the Faithless to eventually fade into that. Assuming they know about the situation, which is apparently not guaranteed.

I thought the sword mostly stole the soul and the eating was just a metaphor for that. Actually slowly destroying the soul is different.

Sometimes they might have some prior deal that precludes them from oblivion via the wall, especially since these ones dealt with demons, but yeah. Not everyone is aware of the full breadth of their options upon death, or what their choices in life might get them.

Nope! It slowly eats them. The guy that lived in the sword last did a magic thing to stick himself onto the sword longer instead of being digested, but even with that, he was still being slowly eaten.