I played the new demo. Some things:
You forgot to add Kanpachi's facepic for the first few times he talks.
When you exit the "Labyrinth M" area, the "Labyrinth Fight" music keeps playing in the other areas.
Also, the Labyrinth enemies (especially the Fire Whirrs) need to be nerfed. It's way too easy to die, especially with the Level One fishing rod.
"If it weren't for the grating, you could get through. Go in anyway?" This makes no sense. Also, shouldn't the Core Room and the Dark Place be completely flooded?
Okay, woah, now we're making no sense. The core should not be here. And EPSECIALLY not with 7HP and a short-range gun. It's ridiculous. AND you get the Booster for no reason at all.
Insta-death spikes. And they only do ten damage.
I just did that whole last bit of the Waterway, and now it's Ogre with no save point. *cries*
Altogether not bad, the TSC is very good, but it's a bit difficult with only 7HP. I didn't even try to beat the core without a trainer.