After the dwarf (small man) gives you the quest to kill the big thing that has just been dug-up by them you go into the room and look down a pit and see Arggggghhhhhhh a realy big daemon which is nearly unstoppable (I caused 4 damage with a trap i set there).
Now I could morph into the slayer but i was told in another forum that turning into the slayer lowers your stats or somthing so i dont want to do that, anyother way to kill it?

You'll need +3 or better weapons to hit that demon. You can beat up on him with one or two tanks. Be sure to use appropriate spells and gear to beef them up and especially to make them immune to fear. The spell bolt of glory is very hepful as well.

becoming the slayer reduces your reputation by two every time you do it, and it really pisses off your party if they're goodly

Doesn't piss them off unless your rep gets exceedingly low.
(yeah, I can see it now. 'Oh, there you go, turning into the incarnation of Bhaal again. I HATE it when you do that. Can't you ever... blah blah blah.')