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Just curious, the fleshy abundance psychic power from the chaos index says that it targets a Nurgle Daemon does that only target models with the faction keywords Nurgle and Daemon? Or would it also affect models with the keyword Daemon, for example Mortarion has the Nurgle faction keyword and the Daemon keyword, can I use fleshy abundance to remove d3 wounds from Mortarion

Yes, Mortarion has the right keywords. Faction keywords have no particular relevance outside of list building.

Any creature that is both Nurgle and Daemon is a viable target for this. The main differences between Faction Keywords and Unit Keywords are that some keywords have relevance through the main rule book, such as everything in a Battleforged list being required to share at least one Faction Keyword, or like how Craters don't slow models with the Titanic Unit Keyword.