The seed only eliminated magic that has to be channeled from elsewhere, apparently, by closing Earth off from other dimensions. So witches and wizards have lost their powers, and no new slayers can be called. Newly turned vampires are mindless beasts, because the demon that animates them can no longer get to Earth and fully inhabit their bodies, but must remote control them from their home hell dimension. But existing Slayers and vampires keep their powers.

i.e. it's arbitrary, makes no real sense at all, and it's set up so the writers can do whatever they want.