This was really short, but I enjoyed what I saw. Having story branches can get hugely complicated, so I applaud you for even trying one!
I wasn't sure about the atmosphere at the start, but it sucked me in as things slowly unfolded and became eerier. If you enjoyed making this demo and feel you've got enough to continue with, you might as well go for it! Horror is normally well received, but you have to decide to make it for you, and not just because someone else thinks you should. If it was me, I'd probably try to go with a smaller and simpler concept to find my feet with the engine before taking on something like this, but you know your own skill and focus and whether or not you think you'd manage to finish something like this!
The demo itself was well handled. I didn't find any bugs, although you could do with proofreading everything again since there were a few typos and shaky punctuation. I felt that balloons were overused, they seem a little out of place in this atmosphere. There's quite a few videos/scenes where there's no player input to move text forward, so you do have to be pretty focused in order to read everything in time.
I like Sam and relate to his shyness and anxiety. These kids are made of brave stuff!
SPOILERS
I got the impression that Mackenzie was the monster?