I was wondering if I download this demo, could I still play it online and be safe from microsofts ban hammer?
No one can be 100% positive about that, but my buddy has been signed in playing it, and he's still on Live. So you should be fine (for now...)!
I was playing it yesterday on live. In my opinion, I feel it's safe because the demo can be played on non-modded 360's. And on a side note, I use regular single layer dvd+rw's for demos I burn and they work just fine. Beats wasting dvd's.
Check out this new site from GameStop. It lets you zombie yourself and I can't get enough of it. http://gamestopl4d2.com/