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I guess you tried right-clicking on the game's name, and then "remove local content".
If it does not work, restart steam or even your computer (guess it's a steam issue). If it does not work, please let me know and show me a screenshot if you can :)
http://gyazo.com/7392501b82be6831ee2bfe5485640509
This also happened with the "Qbeh-1: The Atlas Cube Demo."
I uninstalled both of them, but they are still showing up.
I have a support ticket open, but the person just told me to uninstall the demo and remove the installation folder (which I had already done). I'll add this one too, so that they might be able to narrow down the problem.
Edit : Some of us have tried to remove from their library some demos. For some ones, it works, for some other ones, it does not work...
Otherwise, you would have a list of hundreds of f2p games and demos. I have played tons of demos on steam, but this was only the second demo I have played on steam that did not automatically remove itself from the games list when it was uninstalled. This also happened with "Qbeh-1: The Atlas Cube" demo (which was added to steam as a demo around the same time), so I'm pretty sure it has to do with how the demos have been coded recently.