Hi,
I have done a demo of my game and I want to send it to my mate so he could test it for me. Can I do this? If yes, would he need the AGS software to be able to run the game?
If he only has to play the game and not be able to edit it, you don't need to include the AGS software. Just choose "Build EXE" (or press F7) in the editor to compile your game and then send your friend the contents of the "Compiled" subfolder in the folder for your game.