In my opinion, I feel that the only reason Nelo didn't kill Dante when he had him against the wall was because after seeing the amulet he realised the true reason he had even gone to the Island. He went there to be like his father, to prove his blood and strength was better than anyone's. In this he failed, and fell under Mundus' control. Whether Mundus defeated him is unknown, like Zato already said. But all we do know is that he was a class of enemy, regardless of his corruption. Even if Vergil had been his true self, after he had disposed of Mundus he would of soon returned to his rivalry with Dante. If anything returning stronger from the victory he never managed to obtain, and perhaps even becoming the ruler of Hell itself. But we all know what happened, and we can only speculate here. That was just my opinion, take it as you will