Oh my gosh. I assumed the title of the game showing up meant the end of the demo. I definitely have stuff to say about this section and the new update.
First of all, the flesh arm is easily the best weapon, if not just for the amazing animation work. Speaking of animation, the emotes are also very fun; there needs to be a more intuitive way to equip them, though.
I also really enjoy the intro! As a block-out it sets the stage really well and I think it will look really good in full pixel art, or whatever artstyle you end up having it be.
About 966, certainly cool gimmick, there are some changes I would make though because currently I feel they are the most annoying enemy. First I feel like you are a little too liberal with the amount of them that show up. With something like 610 or 3199 it should feel an infestation or a swarm - and it does, but with 966 I feel like they are supposed to be a more intelligent, even cheeky species. A good way to achieve this would just be to lessen their numbers but in turn make them harder to deal with. This would also have the effect of giving them more mystique which would help the second problem, they aren't as scary/intimidating as they are annoying. The current gameplay loop of fighting 966 is 1) minding my own business 2) one shows up outta nowhere, shocking me for a second 3) I hit it over and over until it dies. The only scary part of fighting them is when they show up, which is basically the equivalent of a cheap jumpscare with no anticipation. If there was a way to know when one is in the room with you, that would not only make them way less annoying but also keep the player constantly on edge - in turn making the eventual scare more effective. I'm thinking they make a spooky sound that grows louder when one of them's close, but if you're worried about their lore-accurateness you could also put some text up that says "you feel sleepy..." or something lol. And finally there's nothing to actually be anxious about if they are pathetic in combat. They could run back into the shadows after getting a hit in, or whatever you can give them that properly balances all the other changes.
Anyway, I made it to the big, boss-fighty room but couldn't get anything to spawn so idk.