Bear in mind I have not done this quest, but from the description of the Holy Icon it states you need it to enter the Demon Oak area, and then it disappears. You then need to leave the area and talk to Oldrak. Then you reenter the area to fight the Demon Oak without a Holy Icon.
From this I think we can assume the Holy Icon is simply a one use key that forever opens the area... at least until the quest is finished
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