Hi linko,
This is a known backwards compatibility bug in GameMaker itself since the introduction of typed variables. For some reason, this particular reference to a sprite in the demo is not recognized as a sprite—despite other references working just fine.
For now, the best workaround is to simply comment out the indicated line 114 of obj_demo_mascot's Step event. You will be missing one of two CTC prompts, but the demo will be fully functional.