Apparently the game will only run at 60hz on UK televisions. Dogzilla at the xbox.com forums found a fix for this.

From Dogzilla:
If your getting the Pal 50 not supported do the following:

1 - Turn off console

2 - There is a switch on the connector of the component cable , switch it to TV

3 - Power on the console and go to System/Display/ PAL Settings,choose PAL 60 and save settings

4 - Power off and flick switch on cable back to HDTV

5 - Power on, you are now displaying in PAL 60 (Providing your TV supports it)

6 - Demo will work now
Also for VGA connection:
Nemesis x27:
Here is the fix if you using VGA cable.

1. Unplug VGA cable and plug in the component/composite that came with your 360.

2. Plug this in to a TV and make sure the switch is flipped to TV

3. Turn your 360 on.

4. Go to System blade, Display > PAL Settings and set it to PAL-60.

5. Save the settings, Turn your 360 off.

6. Plug your VGA cable back in and play the demo!
Source: UK Demo Error Solution