[[WMG: Psaro didn't know Alena was one of {{The Chosen One}}s.]]
He was never after her at all -- it was the King he was after all along. The King's gift [[DreamingOfThingsToCome of sometimes seeing visions in his dreams]] threatened his plans, so he moved to take care of him. It was just a coincidence that Alena happened to be outside Zamoksva at the time, and a lucky break for her that the monsters moved against the castle during the Endor tournament... probably on the advice of Psaro's most powerful soldiers, like Aamon. If they hadn't moved right then, Psaro would have been there, and the final fight would have gone... poorly for her.
* Alternatively, Alena would've killed him right there at the Tournament.

[[WMG: Psaro's KarmaHoudini status was allowed because it would break the Cycle of Evil Rulers.]]
Just like Estark was destined to come BackFromTheDead, Necrosaro would become a SealedEvilInACan even after you kill him, to be a threat to the world centuries in the future. Whether he deserved it or not, saving him and resurrecting his MoralityChain would nip this in the bud.

[[WMG: VideoGame/DragonQuestIV is a prequel to VideoGame/DragonQuestIII]]
After the defeat of Estark/Esturk and (P)(Necro)Saro, Nadiria/Evil World was populated by normal people and over time morphed into Alefgard. That's why it's still the "dark world" in III.

[[WMG: Chapter 6 is an alternate version of Chapter 5.]]
And thus, Psaro can stay dead after all the stuff he did. Preventing him from gaining any {{Karma Houdini}} status as long as the player never does Chapter 6 or gets far enough in it to bring Psaro back.