Blight's attacks can deal severe damge, but this battle can be easily won. While Blight floats around at the start, it is mostly invulnerable to attack, due to the mist protecting it. When Blight stops moving and takes a stance that looks like that it is going to unsheathe a blade, use Veil of Mist immediately to prevent it from using a fatal slash. This creates an opening in Blight's defense; lash out at it and Goldnail will be knocked out of the demon's grasp. Assault the blade until a green field of light is summoned, which then immediately execute a Sub-Reflector Counterattack, as the blade will emit an explosion in less than a second later. Then, Goldnail will glide back to the fallen suit of armor, reanimating Blight. In the process, the blade and Blight are invulnerable. Blight will also summon a ring of blades that surround it. Immediately Power Slash the blue blade to knock it out, but it is recommended that the camera is moved to a horizontal location, so all the blades can be slashed at once. When Goldnail is knocked away, attack it again. Repeat the strategy until Blight's defeat.
After defeating Blight, the Emperor will be taken control of for a while. Head towards the cells where Kaguya is imprisoned to set her free. Afterwards, Amaterasu will be able to trade Demon Fangs to the Emperor in exchange for some unique items. When ready, return to the city.