As the file size suggests, a tremulous .dm_69 demo is not a video file. Use the /play command in the tremulous console to play them. Use the /video command to record a video (.avi file).
Unless you have a supercomputer the video encoding cannot be done in real time. A recommended method to recording a smooth video is to record a demo of the sequence you want then to issue the /video command while playing the demo back with a suitably reduced timescale to allow realtime encoding.
