WHAT'S A GOOD LENGTH FOR A DEMO?

author=Novalux
I'm kinda new to the process myself, but I was thinking that you would start off meeting the supporting char in the library, and then you hear something outside. The chars go outside and find that the townsfolk are turning into monsters. You would have to run/ fight (good place to introduce players to fighting mechanics) your way out of the city. make sure intense music is playing in the background and there is a sense of urgency.
OR
Depending on whether you want the chars to know who caused the event, you could have the chars meet with the king. During their meeting the king would turn the guards into monsters and make an escape. Something like that, anyway.

I generally build games with demos as I go, toward a complete game. (And that is probably why my games never make the Featured Games list) But if you're creating a demo to provide a cross-section of the game...

Start with the battle (3) and end with their defeat and loss of crystals (7).

Let's explain why. The demo should skip all background instead giving them a taste of the game and how it works. It would also skip the meet cute, a key draw in the game. The player suddenly wants to know how these two met (so long as they're interesting). Now, we start with the battle to showcase your mechanic (which should at least be somewhat different from the default, maybe having a limit break system or something) along with teaching complete noobs how to fight. We have the flight from the town, meeting the friends (getting some quick quest exposition that isn't in the main game because you did start in media res), heading north and learning of the crystals, and then it ends with the crystals being forcibly stolen. Why? Because the best place to end a demo is at Rising Action. The very point where the big bad shows their han, the tension reaches highest, and you get the sense, "okay, the rest of this game will be about stopping this guy." This would be the end of the first act in most plays. Second act would probably end about at 15 (or technically, in the middle of 15 with a few events happening at the same time to build tension). Third act usually is the climax (the character masters their power), and sweeping up the enemy troops at the end (plus the epilogue, dammit more people need to make game epilogues) represents the Falling Action.