Hi! No need to be embarrassed, I know the demon can be tricky...
It is possible to get past the demon, but it is difficult. The key is to run (hold shift while moving) and know where you need to go. In this case, I assume the place you need to go to is the room right next to the stairs on the bottom floor (which you probably already know). It is especially important to run and know where to go after the group has gathered downstairs, since the demon will be even more difficult to avoid later.
As for why the demon has appeared, it indicates that you have begun a certain ending of the game. To get a different ending, you will have to gather certain items throughout the mansion before things get too bad. There are six of them that are essential to getting another ending.
I'm really glad you enjoy the game so far. And don't be afraid to ask for help again if this wasn't enough!