Sorry if this is a bit long and winded. OK first the normal stuff. *INSERT Preamble against Skeptism, Deconstructionism, and abusive Socratic methodology.* E.g. when I give the example of "stealing is bad", don't go thinking, "but if his wife and kids are starving?" He's a bachelor and infertile. :) Moving on what I say is from a Christian perspective. Note that this is not psychotic fundamentalist, nor I'll pull anything out of my touchy-feely ass liberalism. This is what sound Christians have developed, though about, and confirmed over the centuries, and includes any sound Christian church. Now on Satan.
In the primordial Universe God, the One, True, All-Knowing, All-Powerful, etc. ad nasuem God, created his messengers to help with the spiritual grunt work. We call them angels. The angel that was the most powerful and closest to God in likeness, ability, etc was called Lucifer. At some point between Creation and the Fall of Man, Lucifer fell.
In the Islamic tradition-and I'm citing since its tradition refers to God as well-Lucifer's sin-sin properly translated is a sporting term of archery meaning "miss", it is also the words used in Greek plays for "flaw" as in Tragic Flaw-was that when god created Man he commanded all the angels to bow to God's latest and favored creation. Lucifer didn't, and so was demoted to Jinn-a being created of Fire in the Islamic mythos, where Man is of Earth and Angels of Light--was cast out from God. So for Muslims Lucifer's sin was disobedience.
For Christians there is no direct reference to the Fall of Lucifer aside from its Tradition and John's vision described in Revelation which too is following Tradition. (Note that Revelation is not how the world will end. It is what it is. It is a vision in which the world happens to be destroyed.) Tradition holds that at some point Lucifer actually tried to be God. That is the only thing assured in Tradition. How he did this is debated. Popular ones involve him actual forming a war against God-which really bring light to the poetic saying that Michael's name is his battle cry: Who is Like God? I.e. who claims to be like God. The other popular one is that when God is visiting in Eden, Lucifer assumes God's position. So for Christians the sin of Lucifer is Pride.
In any case Lucifer is out of God's presence. This is what is actual meant by Hell, total and permanent removal from God. Fire & brimstone imagery comes from Jesus accounts of what happens to people after death, and it is just that imagery. Gehenna is actual a slum area south of Jerusalem with sulphur pits where people threw there garbage. It's the equivalent of saying when we die like pages in a company's file, those who helped out will be filed in the permanent storage while the rest are sent in the shredder and office incinerator. It's metaphorical not literal.
So Lucifer, is separate from God and so are a couple of other angels. In the Christian Tradition that is all of Lucifer's punishment, to be separate from God. There is nothing said about it losing power. From that since misery loves company, and he has plenty of time and power to do stuff, Lucifer now takes the role of Satan or the Adversary, attempting to remove from others what was removed from him.
From Tradition his favorite method to accomplish this is temptation. He just places circumstances that allow the person to Willfully do evil. Notice the capitalization on Will, meaning that it is the exercise of the Free Will. Free Will does not mean basic choices of life, such as, "What will I eat?", "Where will I go?" Free Will is about choosing to follow biology and instinct or to be human? E.g. getting out of bed while still being sleepy is an act of Free Will since it is not essential for survival and uplifts and distinguishes the Self from an animal. Note that there is nothing inherently wrong with biology or the physical. As it states in Genesis "and God created everything and it was good."
This brings me to the point I'm getting at. Good and Evil are two sides of the same coin and are not "created". Everything that comes from God is good. Everything that decides to go away from God is Evil. So most smart asses will say in an attempt to disprove and create binaries in Christianity that God created Satan and therefore Evil. No this is not true. As in the proper definitions of Good and Evil, God created Lucifer and Lucifer was good. However since Lucifer had Free Will, he exercised it to turn away from God and therefore made himself Evil. The same goes for the other fallen angels, demons, and humans as well. They choose to be Evil.
This is why Temptation is the method of Satan. It does nothing to bluntly coerce people into evil. That robs them from Free Will and absolves them from the responsibility of their actions ala "the Devil made me do it." Knowing this all actions of Satan are temptations. He too does not create Evil but set opportunities for it.
So why is there Evil in the world? Because individual people choose it. This is called Physical Evil-that's a theology term. So a person stealing stuff activity is being physical evil. Now Evil that other people receive or arises from this is call Moral Evil. So the distrust, anxiety, and stresses the community feels from the theft is moral evil.
So why doesn't God just remove all instances of Evil and forgive Satan? Because then there would be no Love. Love requires Free Will and so does Evil. Satan knew what he was doing, and people know what they are doing can constitute as going against God which is not Good, therefore they incur the full responsibility. So to remove Evil is to also remove Good and Love. Therefore any action we has humans take would be fully and permanently attached to our own nature as created things. A fire when burning give hat and light, which are good, but it is not loving because that is the nature of fire. No Free Will makes us the same in kind as all animals, plants, rocks, and in application makes us Materialists. I.e. materialism actually means that everything is just the some of its components, we are all atoms and the only distinguishing features is how they are arranged no more or less. Materialism does not mean that a person likes physical things.
OK so maybe that isn't still a satisfying picture of a loving God. Well in Islamic tradition-which is why I brought it up-there is a redemptive quality of Evil. God being Just does punish the wicked for it is required to atone for the Evil done. However the punishment is limited. It may be a very long time, but it is not eternal as in Christianity. There are even some sects in Islam that the Jinn Satan repents his sin, and God forgives him and restores him to his status as an Angel. In Christianity there is something similar in the Apocryphal book of the Revelation of Peter. This book describes another vision in which Peter is escorted by an angel through and Hell, i.e. being without God, and has vivid imagery similar to Dante's Inferno. At the end the angel says there is a big secret and he shouldn't tell anyone, but naturally for the flow of the book does to Peter. The angel states something along the lines that "this isn't real everyone goes to God" or "this isn't forever."
The Revelation of Peter was very close to being adopted into the bible canon, but wasn't, and you could probably guess why. Now I'm smart, and I'm guessing that you are smart, but people are very, very dumb. As with all things people cannot and should not ignore what they know is to be true. E.g. 2+2 always has, is, and will be 4 once you understand what the number two, the number four, and the concept of addition mean. So in a world where people were opiate easily with huge entertainment industry and free food, the Church Fathers moved by the Spirit as well as common sense, decided what would be appropriate as essential for trying to piece together what that blue-collar weirdo from thirty years back did.
He-he didn't think there was so much to Christianity and that it could possibly make sense?