I got it working.
I updated my display driver and chipset driver. I also had to set a custom resolution of 1280x960. I think this was why it wasn't loading after updated the display driver. I think the display driver and/or chipset driver update fixed the problem with it crashing when trying to load a race.
Anyway, the demo rocks! I just hope the 360 version looks as good as it does on my PC because I'd much rather play this on a widescreen HDTV!