I can confirm, Demon Slayer definitely still drops in Drowning Deeps. I just got it today. It was my character's 3rd run, but RNG is RNG; your luck may vary. It is pretty easy to solo with the gear these days, so farming is viable but use your time/luck as you see fit. Happy hunting!
Edit: Also, in regard to the question of Divine [Grace] Stones, please do not waste your time or money fusing badges. You can get a Legendary Soul Badge Chest from the Dragon Express (2nd tab) for 30 Solar Energy. If you're playing 3rd spec Warlock, you can choose any. Then buy the Warrior's Soul Badge Essence Chest (from the 1st tab of Dragon Express), select the Exemplar Essence, and create the Exemplar Badge (at least that's the one I'm using atm).