I've had these notes kicking around for a while. I inflict them on you now.
In the Buffyverse, souls exist as things separate from the body, and are somehow important to the essence of a human being. When a vampire kills someone and does the blood-drinking thing, the human dies. His or her soul then goes to its final disposition. A vampire, which is a species of demon, lives on in the body. The vampire is not the same entity as the human, though the shared memories allow the vampire to confuse the associates of the dead human (and then eat them).
So what about Mr Broody McForehead?
Liam: big dork. Dead.
Angelus as vampire: incorporeal demon parasitically inhabiting Liam's corpse and borrowing his memories. Not Liam.
Angelus as ensouled vampire: incorporeal demon, inhabiting corpse, borrowing memories, and cursed with the motivations & conscience of the dead human. Not Liam.
If Angelus + soul == Liam, then he'd be an idiot to feel any guilt about things done while he was dead. (Yeah, I know, Angel's not bright, but he's not that bad.) The demon did all that stuff, not Liam. So we conclude that the entity resulting from the curse is a hybrid of the two: the demon at the core, with the human layered on top. Thus it gives itself a new name, Angel. The hybrid entity feels the guilt, not the human. The hybrid is going to have some human urges and some demonic urges.
Vampires as a species reproduce asexually, by sharing the blood infection. The sex of the human host is irrelevant to them except to the extent they choose to use the memories of the human they displaced. Human sexual behavior is pure entertainment to a vampire. Vampire/demon social structures are likely entirely different from human social groupings. For instance, lots of romantic takes on vampires make much of the sire-child relationship, their analog to parenthood. A human would be creeped out by parent/child incest, but vampires aren't because they're a different species. Different taboos.
I generally theorize a pack structure for vampires, with the strongest fighter at the top. The pack leader gets the usual privileges: eats first (c.f. The Master and Darla), has its choice of sexual partners, collects all the spoils (c.f. Sunday), is the most attractive vampire to the others. You'll see this theory of vampires in lots of my writing. For instance, providing an explanation of why a 240+ year old demon would form a crush on a 15-year-old demon Slayer. The Slayer is the best fighter, obviously a pack leader, therefore attractive. Kill the Slayer or sleep with her: either action would raise the status of the vampire who managed it.
Angel thinks he's in love, and he might be, but his definition of love springs at least partially from his species' normal behavior. He's a vampire.
Are there demon species with souls? Or is demon defined as "living thing without a soul"? What does not having a soul mean? Are there any other species out there that have them? Does Dawn have one? (Fortunately for me, neither of my long stories is set in a world with Dawn.) Are all demons evil? (Does Buffy stop to ask?) The Buffy cosmology starts to get silly in Season 4, I think, starting with the absurd subplot of Buffy's roommate, and by S6 it's hopeless.
I think in the world of "Breaking Glass" & "Substitute", I'll go with something based on the early Buffy approach:
- The soul is the self. It is the aspect of humans that can cross dimensions. It is how the Powers grant life.
- Demons are by definition living things without souls. Their life comes from another source. (Something set against the Powers.)
- If it doesn't have a soul, the Slayer is supposed to kill it.
- Vampires are the single most plentiful demon on earth, by far. They're half-breeds, and weak.
- Real demons are rare, and scary. Eyghon, the Mayor in snake form, Anyanka: examples of real demons. They must be summoned to appear on Earth/our dimension. An open Hellmouth would also allow them in.