The etymology of "lukavy" has to do with a bend. E.g. archbow is "luk" and a bend in the river is "luka". The adjective is also used to describe fairly innocent slightly furtive behavior, such as in "sly smile".
Correct, as in "лук и стрела" (bow and arrow). Thus, the lukavi (or lukavy) is the one who bends the truth and therefore deceives.
If you think about it, deception is not a lie. Deception is a distorted, or "bent" truth. Rather than tell something completely untrue, satan uses distroted truth to deceive.
So, he is not a prince of outright lies but a habitual bender of truth, or lukavi.