If Martin had claimed to still be involved with demons and other dark magic, this would be a completely different conversation. Nathaniel had spent many years of his life being wary of mages, and the dangers they supposedly courted on a daily basis. It wasn't until he became a Warden and started fighting alongside mages (Anders in particular) that he began to be more comfortable with it, and to realize that there was a good side to magic.

He could even possibly be forgiving of a mage using blood magic, so long as they were using it on themselves and not harming others with it. "Others" being people that weren't actively trying to kill them -- blood magic used against darkspawn or other creatures didn't count.

Still, worshiping demons didn't sit well with Nathaniel, especially because of all the stories he'd heard about mages being so easily possessed by demons. So, if Martin were proclaiming that he was guilty of committing such acts right now, Nathaniel wouldn't take it nearly as well. But he's not; he's confessing to things done in his past, things that he was quite obviously ashamed of and had paid the price for. Nathaniel could be more understanding of that.

"I'm sorry," he says quietly, "that you lost your friends. I know what it's like to watch your friends be slaughtered in front of you, and helpless to stop it." He'd lost his share of people since becoming a Warden, and it was always hard. It must have been much, much worse to know that you were in part responsible for those deaths.

"I'm glad that you came to your senses, though. You seem to be a much different man now."