Comparing the words indemnify and condemn:
- Both contain demn as a root
- Both are transitive verbs
Why is one spelled differently from the other – why not indemn, or condemnify?
Because the root words are, respectively, Latin indemnis (adj.), and Latin condemnare (v.). So condemn (con = "with", demn = "hurt") in Latin is the base of the verb, and needs only an ending to become a complete verb. When a word is transliterated to English, any ending is dropped, in this case resulting in condemn. (Note that the process involves a Latin verb becoming an English verb.)
However, the base indemn (in = "not", demn = "hurt") was apparently (for reasons unknown to me) not chosen from a verb but from an adjective. When this happens, an English adjective-to-verb ending is appended to the word (indemn); in this case, -ify was chosen to turn the adjective into a verb - hence indemnify. (Here, note that the process involves a Latin adjective becoming an English verb.)
Indemnify comes from the Latin indemnus, indemnum; the -nus and -num depend on the case of the word, so -nify is actually an ending, and not part of the regular -mn spelling or pronunciation. Though they both have been derived from damnus (to penalize), indemnify is taken from the noun indemnity, and condemn is a verb.