Demodulation on noise
Basicly DEMON is looking for peridicidies in the signal envelope, like the swish ,swish, swish, ....sound that a propeller of a big ship makes.  The movie Das Boot, has some nice examples.  It's a good way to extract balde rate.  Modern skewed multiblade propellers don't produce much for DEMON to see. I would have expected to see something in DTIC which I interpret more as this is so old, why bother.   

You need to make some choices like the band you expect to see a modulated envelope. It needs to be in the right place and wide enough, but not too wide.  While not obvious in any papers, running more than one DEMON is permitted.

You can thank Australia and find a block diagram in:

http://digext6.defence.gov.au/dspace/bitstream/1947/9119/1/WRE-CPD-TM-169%20PR.pdf

but it will be up to you how to interpret in terms of FFTs.

Also something called a modulation processor in:

Nielsen, Richard O. Sonar signal processing. Artech House, Inc., 1991.
which is unfortunately out of print, but useful if you can find it.

If your theoretic interest needs to be scratched,

R. O. Nielsen, "Cramer-Rao lower bounds for sonar broad-band modulation parameters," in IEEE Journal of Oceanic Engineering, vol. 24, no. 3, pp. 285-290, Jul 1999.
doi: 10.1109/48.775290
keywords: {amplitude modulation;frequency estimation;phase estimation;signal classification;sonar detection;sonar signal processing;Cramer-Rao lower bounds;DEMON processing;amplitude modulated broadband signal;blade frequency;discrete frequency lines;low SNR;modulation frequency;modulation level;modulation phase;parameter estimation;passive sonar signal processing;propeller noise;propulsion shaft;rotational frequency;sonar broadband modulation parameters;source classification;Amplitude estimation;Amplitude modulation;Frequency estimation;Frequency modulation;Parameter estimation;Phase estimation;Phase modulation;Propellers;Signal processing;Sonar detection},
URL: http://ieeexplore.ieee.org/stamp/stamp.jsp?tp=&amp;arnumber=775290&amp;isnumber=16844

Don't expect an easy time.  A lot of tweaking on real data will be required.

Using "Modulation Processor" as a search term as opposed to DEMON would help Google.