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Yes, demo is in the scrabble dictionary

...and is worth 8 points by itself.

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Demo Definition

noun

A brief tape or recording illustrating the abilities of a musician or other performer.
from The American Heritage Dictionary of the English Language, 4th Edition
A demonstration, as of a product or service.
from The American Heritage Dictionary of the English Language, 4th Edition
Informal A product, such as an automobile, used for demonstration and often sold later at a discount.
from The American Heritage Dictionary of the English Language, 4th Edition
Informal Demolition.
from The American Heritage Dictionary of the English Language, 4th Edition
A recording intended to show off a song or performer to a record producer.
from Free Scrabble Dictionary

verb

Record (a song or piece of music) to demonstrate the capabilities of a musical group or performer or as preparation for a full recording.
from Free Scrabble Dictionary
Demonstrate the capabilities of (software or another product).
from Free Scrabble Dictionary

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Top Words by points

Points
dome

7

2 letter words with DEMO

Points

do

3

om

4

oe

2

od

3

mo

4

me

4

em

4

ed

3

de

3

3 letter words with DEMO

Points

emo

5

med

6

mod

6

dom

6

doe

4

ode

4

4 letter words with DEMO

Points

dome

7

demo

7

mode

7

Found 18 words in 0.14607 seconds