My interpretation, as I hear it, of the song as sung by David Hammond.

'Tis pretty to be in Ballinderry
'Tis pretty to be Aghalee.
But it's prettier to be in Bonny Rams Island
a'sitting forever beneath a tree.

Ach-hone, Ach-hone
Ach-hone, Ach-hone

For often I wandered through Bonny Rams Island,
arm in arm with Phelim my demon.
And he would whistle and I would sing
and we would make the whole island ring.

Ach-hone, Ach-hone
Ach-hone, Ach-hone

Once I was happy in Bonny Rams Island,
but now 'tis sad, 'tis sad could be.
The ship that carried Phelim my demon
is buried forever beneath the sea.

Ach-hone, Ach-hone
Ach-hone, Ach-hone

Allan