Do you know how to get the current connection speed, attenuation and noise margin figures from your router?
When you plugged into the main phone socket, did you remove the faceplate, so that NONE of the phone extensions worked in the property? If not, then noise picked up by extensions may still be affecting the service.
The capping is probably a thing called the IP Profile, which Demon can see and should be able to tell from data they are given whether your line is stable or not.
Demon buy service from BT Wholesale, and BT wholesale manage the ADSL part of the service, with Demon connecting you to the internet. Demon have access to diagnostics from BT Wholesale.
As to whether you are being capped,. then if your ADSL modem is connecting at say 6Meg for 30 mintues, then 4Meg for an hour, 2Meg for a day, then back to 5Meg, what you will find is that a setting called the IP Profile will remain pretty much set at 1.75Meg all the time.
will tell you what the current IP Profile is on your line, and you should have been sent there by Demon before they called the engineer out for you.
IMPORTANT NOTE: BT Total Broadband has nothing to do with your broadband, they are a different group in BT to BT Wholesale.