I did a little digging around, and there is a "winamp.m3u" in my Winamp directory, and it has one entry: demo.mp3 (in the same directory). If I rename that m3u file, "demo" doesn't show up in Now Playing. Unfortunately, it doesn't really change the behaior other than that: the Now Playing list still ...

I just noticed this today, and I'm seeing the same thing. The album art and track information display correctly for a few seconds (about 20), then switches to "demo" and the album art clears. If I right-click on the track name and choose Properties before then, I get the track properties for that ...