Naraku had worked out quite a clever scheme.
Originally, he had wanted Manganomaru to attach the human arm he had supplied.
That way, through the arm embedded with a Shikon Shard and tampered with by him, he could slowly, secretly eat away at the other demon.
Although he did not know just how vast a reserve of demon power the so-called Flying Demon Moth legacy contained, even Manganomaru alone gave him the impression of an aura approaching that of an ordinary great demon.
Absorbing him would surely be a profitable venture with nothing to lose.
He had never expected Manganomaru to ignore him entirely.
Manganomaru had simply destroyed his puppet.
His [first scheme] had gone up in smoke.
This went to show just how varied and extensive the experiences of mainland demons were. Many had read military treatises written by human sages and experienced the complexities of worldly dealings. Demons with access to various sources of knowledge understood principles such as "someone offering unsolicited favors must be up to no good."
Giving away a Shikon Shard for free?
Even a fool would know there was something seriously wrong with it.
Successive generations of Flying Demon Moths had already used that trick to death.
(In the original movie, the Flying Demon Moth had used a Shikon Shard contaminated with his own demon blood to control Kagome, using her to toy with Inuyasha. Had the sisters Lapis Lazuli and Glass not been enslaved in body and mind the same way?)
Naraku, who could not even control his own children, was simply showing off his paltry skills before an expert.
Naraku's [second plan] was to settle for the next best thing: use Li Xia to deal with Manganomaru, or, put another way, use Manganomaru to test Li Xia.
Whether Li Xia killed Manganomaru