You can't really edit demo files, the best you can do is go to the tick where the scene starts and encode the video from there in mp4 (h.264?) or avi format. It take a while to encode and it's quite complicated.
I haven't done source recordings in a while.
Or (if you don't care about super duper quality) you could start at the tick and record using fraps/obs/dxtory/potato.