ohhh I see what's going on here. since you cloned the demo, you need to use postsFolder: 'demo/posts' and pagesFolder: 'demo/pages' since they are located inside the demo folder. The demo is setup slightly different than a standard setup since it's in the subfolder.
Also make sure you are on editing the config.js gh-pages branch as this is the branch Github uses for hosting. If you want to use the code you have on master, just merge master into gh-pages. If you have any more issues, feel free to email me.