User blog comment:ImperiexSeed/Supernatural Mysteries/@comment-1509826-20120310175518/@comment-4920092-20120312181025

Okay, let's see.....

1st. In Crossroad Blues, the demon had plenty of reason to lie....she didn't want to give Dean what he actually wanted her to give him.

2nd. It's possible that he didn't know she was the last seal. Based on what Ruby said in her last few moments, it was very privy information. It's likely only Lilith, Ruby, and the Angels knew.

3rd and 4th. Iron doesn't banish/kill demons, it just hurts them. It's possible that Samhain was merely highly resistant to pain.

5th. Using God's name for detection is kind of unnecessary unless there's only one demon in a crowded area, and you need to be discrete about it (like on the plane). And Palo Santo is probably difficult to get in the US, and it isn't like the brothers had much time off to take a trip to South America ;).

There is no official reason given in the show (there may be an interview, but if there is, I haven't heard about it), though I also have my own theory.

Hope that helps some!