Picking one of them to be his child. He does this by having them pick colored stones. Who ever picked the odd colored stone had to give up their child to become the devil's child. At the end you see the devil in man form with the child. The child turns back to the camera and has red scary eyes... WHAT IS THIS MOVIE!?

Pretty sure you're looking for Storm of the Century by Stephen King, it came on as a mini-series, but pretty sure you can rent it as a single movie.
Here's some info to go with your description:

... What Linoge desires is an heir, one of eight children that he had incapacitated early on in the miniseries—someone to "carry on his work when he can no longer do it himself", although Linoge's life spans millennia, he is not immortal. Any of the eight children, he states, will suit him. He states that he cannot simply take one of the children. They must be given. But he can punish the residents if they refuse him...

... After they vote almost unanimously, save for Mike, to accept Linoge's demand, he has one parent of each child draw a colored stone from a bag he has...

... Mike calls out to his son and the two men stop to look back at him. Ralphie makes eye-contact with him and bares his teeth, which are now fangs, showing that Ralphie is no longer human...

Storm of the Century (TV mini-series 1999) - IMDb (http://www.imdb.com/title/tt0135659/)

Storm of the Century (TV mini-series 1999)