Your setup is too melee based. This is setup I was usuing in previous game as Pal:
1) Demons (if you don't want to loose too much morale, use griffins)
2) Vamps
3) Ancient Vamps
4) Skelly archers
5) Bowman
You already know the awesomness of Target+Timeback combo, so use Demons as main assault unit (Onslaught skill to move them sooner in 1st turn, and Tactics to move further). Vamps are strike support unit, they are essential when Demons are timebacked (life drain rocks). Skelly archer simply the best ranged unit in the game, 5th unit is optional I used bowman (thorns are good with + dmg items)
It goes like this: (1st turn)
Vamps pausing. Cast Target on Demons, use running and pentagram ability. Archers shoot enemy archers. Vamps use their move and attack archers (melee's are busy with Demons)
2nd turn:
Cast Dragon Arrows on skelly archers. Focus all units on enemy ranged. By the end of turn, cast timeback on Demons.
3rd turn: protect Demons with Glots Armor, cast Target on Vamps. Now it's easy.
When fighting dragons, start fight with 20-30 rage, place archers in corner and cast Ice Thorns to protect them from all sides. Dragons will ignore them, slaughter them with Dragon Arrows.
You really should buy Skelly Archers. Regular dmg is excellent, with Dragon Arrow I saw full stack of Emarlds (25 uints) killed in ONE SHOT. 3/5 units are undead, so zombie form Rina and Dark Commander skill is really helpful.
This is how it worked out for me:
