Only James is not teaching we are justified by faith AND works before God. Only God sees our hearts and knows if our faith is the kind that saves (sufficient for salvation), people can only look at the outside, they see the results of the faith we claim to have. We probably ALL know people who seem like very "good" people, who do "good" things/works, yet who do not believe in Jesus Christ as their Savior. Where Catholicism and other works-based religions fail is by not recognizing that it is NOT the works we do that contribute to our salvation. It is ONLY faith in Jesus Christ - in HIS work on the cross - that saves us.
Demons certainly believe in Jesus - they know all about Him and knew it from their very creation as angels. But Jesus didn't die on the cross to save angels - they chose who they would follow before this world existed. Faith in Jesus Christ is what saves HUMANS and this saving faith is the kind that intrinsically changes a person. Genuine faith WILL bring about a changed life. A life that WANTS to do what is right and pleasing to God - not to be saved but because we ARE saved. Those who imagine God needs their measly, filthy rags of righteousness to save then are actually fallen from grace.
Sure he does:
Seest thou, that faith did co-operate with his works; and by works faith was made perfect? [...] Do you see that by works a man is justified; and not by faith only? (James 2:22,24)