Does the igni upgrade which perminantly reduces armour lower the defence of ALL enemies or just certain types
if its only for certain types how can i tell if it will work or not?

Don't think of armour as a plate mail covering, but think of it as a defence stat. It is this that Igni lowers.

was wondering if it actually works though.
the damage increase doesn't really seem to be there, don't know if it's broken or just weak as hell.

It'd be easier to test on highly-armored enemies like elementals or elite soldiers. Things that have extra resistance to sword damage to begin with.