Except they did defeat him. They rescued the hostages, they took down plenty of demons and he was the one who blew the dam and departed the field of battle. They weren't beaten and forced to flee. He didn't get the location of the motherbox which was his goal.
They didn't manage to kill or contain him on the first encounter but they took no lasting damage either. That shouldn't be the point of desperation where creating a possibly more powerful monster is plan A. And they went into that first encounter with limited knowledge of his powers or abilities and no concerted plan.
Apparently it's carryover from BvS which I only saw once and don't recall. "So you're fast" was a response to Barry, not an insight he seemed to have prior to meeting Barry. It wasn't "I know you're fast, show me something".-The camera stills don't show exactly what Barry can do. Lightning flashes and the guy gets pushed over. But otherwise Luthor had a whole file on him. As did ARGUS. Besides, he seems to have an inkling already. And he says "so you're fast." The batarang confirmed it and he's raising it. It's not like he has no clue what Barry can do at all.
So, thousands of years have passed and those allies aren't around. I don't think a cage and chain would have been out of the question to slow a thief down, even if you have all them allies. The defense set up thousands of years ago should have been reassessed when your threat level has fallen to cannon fodder.-The motherbox was secure when the Amazons had a lot more allies. A Green Lantern and the Greek Gods other than Ares for instance. The Atlanteans were also likely in better shape. Considering the threat Steppenwolf posed I think they did great.