The problem I have with the proof is how it begs the question of free will. The definition of the Demon assumes a purely mechanical universe. Free will is not m

The problem I have with the proof is how it begs the question of free will. The definition of the Demon assumes a purely mechanical universe. Free will is not mechanical. A person with free will cannot be part of the universe that the Demon is able to observe. I'm not sure it's even applicable to the universe we live in because of random events. Is the randomness we observe a result of a mechanical process, or is it inherently unpredictable? If the later, that would make a Demon inherently impossible. It could be we just don't have enough information to decipher the things that appear random to us. Or is randomness what happens when you try to apply Laplace's Demon. As you say, a Demon needs to be able to predict its own predictions. When such a self-referential loop occurs, then any possible event is a "correct" prediction, and that's what happens.