Place foo.dem into any directory with the contents of the Compile.zip package that came with QDQstats. (If you don't have QDQstats or one of its derivatives then your multi level demo file is useless anyway :) )
In a subdirectory called "tmp" you need to have Demtool.exe (also from the qdq downloads page) (www.planetquake.com/qdq)
So now you are ready to compile, bring up a dos-prompt and type "compile foo.dem foo.pak" (without the speech marks silly ..) If all is well then it will process the demo and you will get a pak file called foo.pak that can be played once renamed correctly to pak0.pak or whatever is the lowest available number.
You will be given the option of deleting the "tmp" directory. I advise you NOT to do this as it will contain all the individual .dem files you may wish to do something with, as well as demtool, and you will need to put it back if you wish to compile another demo later. However you can delete the single level .dems whenever you want, and once you have the .pak file you don't need the original multi level .dem.

This next section will tell you how to compile only certain levels from a multi level .dem file (Thanx to Nolan Pflug for this bit) You would do this say if you wanted to run 2 episodes but died in the 2nd somewhere, however the first was very good stuff.

1st:
at dos prompt: mldem foo.dem x y.bat z.txt

2nd:
edit the file z.txt file and remove the level names that you don't want included, making sure there are no blank lines after the last .dem, otherwise screwy things happen. THEN close z.txt !!

3rd:
(this next line is for removing demos on levels you don't want repeat for the number of levels not needed, also delete the rename things or do that later if u want) edit the y.bat file and remove the demtool -pr2m1 r1m7 line (this is because i didn't want r2m1 linked after r1m7 .. take out the -pr things after the last level you want

4th:
run y.bat by just typing y

5th:
if you want a pak:

mlpak yourpak.pak . z.txt

Just like that you have a marathon .. it wasn't that hard now was it? If you have questions/comments then EMAIL ME!!