[Oddly, Fred's reaction to hearing someone sold their soul to a demon is a strong desire to laugh. Very strange...]

In that case... then yes. If it is a solid, tangible thing, I do not see why it cannot be transmogrified, if the person doing the transmogrification knows how to do it.

I suppose it is oddly fitting that a soul was transformed into children, if a bit unfortunate for the previous owner.