Probably because he had reasonable doubt about Demnjanjuk's guilt, coupled with a sense of fair play in the treatment of an American citizen.
If I recalled, Demnjanjuk was convicted of war crimes based, in part, on the sworn testimony of eye witnesses that he was “Ivan the Terrible.” That conviction and death sentence was overturned by an Israeli court because it did not stand up to scrutiny on appeal.
It then occurred to German officials to charge Demnjanjuk with being an entirely different war criminal. He was convicted once again but died before his appeal on that sentence was completed.
I believe also the Soviets forged some of the evidence against him. He was basically a captured Ukrainian Red Army soldier, who was given the choice to be a guard, or to be shot. I call that 'extenuating circumstances'. Plus, the trial was basically the Germans trying to say, "See, it wasn't just us!"