Video Demo glitches

Video Demo was released with Captivate version 6, not 5. It was meant both as a clone of Camtasia and to make it easier to integrate video capture in a Captivate file. There were some minor improvements, not much. Camtasia has moved on more and it remains an excellent choice if you only create passive video, better than Video Demo.

However I do use Video Demo more than Camtasia (which I have in my toolbox) because most of my projects require integration of those videos in an interactive cptx-file. I remember the cumbersome workflow of integrating Camtasia output in Captivate before Video Demo.  It is much easier to record a Video Demo slide, which will remain completely editable in a cptx project. I even replace all FMR slides in a software simulation by a short Video Demo slide because of its better quality.  For really long videos like mimicked webinars I will use Adobe Connect and edit with Premiere Pro. 

So, your goal will define whether you choose for Camtasia or for Video Demo. 

My personal dream for Video Demo is that to be able to use GPU instead of CPU to avoid the problems you have even with a capable laptop which has without any doubt a powerful Graphics Card. That is not possible at this moment and explains the issues you have.

I first started to use Video Demo in version 5.0. other than adding the ability to record your webcam a few years ago, Adobe hasn't updated the basic functionality for a long time. I used to use Video Demo to record my tutorials for YouTube. At present, I've switched to Camtasia and I don't anticipate switching back. Of course, I still use Adobe Captivate for other purposes. I'm a big believer in using the right tool for any job and in this case, that tool is Camtasia.