I have
AMD 700
512 Ram
Geforce 2 32bit
and I had the same problem with the demo running on just 800x600.
I refuse to ever play any game on 640x480.
Every time I tried to select another character model, or in the game another enemy appeared, and also equiping weapons, the music stuttered and the game froze for about 5 seconds.
Then I had the same issues with trying to attack so eventually I quit the demo.
There's no point in releasing a demo if it's going to play so badly and put people off the main game as it did me!