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There isn't an automated way for Captivate to convert your demonstrations into simulations, unfortunately you would have to do this manually.
Brian, while Mark is correct about there being no "one-click" (automated) way to convert from demo to sim, the "manual" process to do so is (or can be) a really quick and simple process. I'll give you the way to do it when you know ahead of time that the project will require both, and you can adapt that process to those situations where the original recording has already been done (see bottom of this message > " For converting existing projects").
1) When setting up to record the demo (demonstration mode should be done first), open "Options > Recording Options and open the "Settings" dialog for "Recording Defaults".
2) Change the setting for automatically inserted highlight boxes (near the bottom of the dialog) to a frame width of, say "4" or "5" (nice and thick), and the color to a bright "red", or perhaps "bright pink" - any color that is very visible.
3) Shoot your demo movie.
4) Use "File > Save As" to create a copy to be used for the simulation.
5) Create a click-box with actions appropriate to what you are trying to do - in most cases, a "Next Slide" option will be the right action.
6) Place the click-box over (directly on top of) the first automatically-created highlight box (or just replace the highlight with the click-box, as you wish) . . .
7) Copy the newly created click-box to the Windows clipboard.
8) Change your view to "Storyboard" view instead of single-slide "Edit" view.
9) The bright red - and thick - highlight boxes should be easy to see in Storyboard view - you may have to make the thumbnail size "large".
10) Paste (CTRL+V) the click-box (on the clipboard) to each slide on which there is a red highlight-box.
11) When pasting is complete, go back to each slide and manually place the click-box over the highlight.
12) You are done. You may elect to keep the highlight boxes, or discard them. Their purpose was primarily to show you which slides require the insertion of the click-box .
This works because during "Demo" recording, a highlight box is (by default) placed on every slide - and at the exact location - that a click-box would be placed if you were using one of the simulation modes for the recording.
For converting existing projects, you can accomplish the same thing by making a copy of the demo movie, then changing the width and color of the first highlight-box so it is nice and visible, then selecting the " Apply to All" option for that highlight box - to change all the rest without any more work.
Hope this helps - it really can cut hours off the conversion process. Have a great day!