It's not just losing most of his cultivation resources; even losing a small portion would be incredibly distressing for Guo Feilong.
Therefore, dealing with Mo Wanli, who had transformed into an Ancient Demon, close combat became Guo Feilong's only choice, as other methods couldn't be used.
To be honest, if it weren't for the public setting, Guo Feilong's strongest method would be the Yellow Spring Divine Power, casting Mo Wanli into the Yellow Spring.
Let's see if Mo Wanli could struggle out of the Yellow Spring. If he couldn't, and was dragged back into the Underworld's Yellow Spring by the projection, he would be dead for sure.