Thanks for the heads up on this request for support.
Yes, what you’re seeing here is really a bug, but it could also be thought of a security precaution. Accounts created with the special keyword username “demo”, CANNOT have their password changed, by anyone.
I say this could be considered a bug, because really, we should allow an administrator to change the password. However, this gets a bit tricky in a multisite network installation, so for now we’ve just disabled password changes on any “demo” account, by anyone. This will be fixed in a future release.
In the mean time, the only way to change the “demo” password, is by deleting the “demo” user, and recreating the account from scratch. I’m sorry for any inconvenience this causes.