Finger of Death: Cast on any character or creature who you are about to engage in battle. If cast on a character, he loses 2 lives. If cast on a creature, it is killed. Enemies killed may be taken as trophies.

If I cast it when I am about to engage character in battle, does the battle take its normal place after my opponent loses 2 lives?

Sure, battle is continued.

Is that same even after using the Fireball, Toadify Spell or the Wand of Dragonfire (treasure)?

I think you could technically insta-death someone if you possessed, at the beginning of the battle, the fireball, toadify, and finger of death spells.

(Or just soul shatter and finger of death.)

You could eliminate four lives before the battle starts. If you're fighting someone with more lives than that, then toadify last.