I have no idea how it’s supposed to work. 
I only know I downloaded and installed the demo version, when it offered me an update I accepted and after installing that, I could no longer start Rhino 7 with above error message.
When I re-installed the older demo version I downloaded first, it worked again.
If that is not what should happen, I’d either need an explanation, or it’s a bug.
What I would have expected is, that the update would install and use the demo license that the initial installation obviously somehow found/used. That’s what pretty much every other software I’ve ever tried did, if the demo wasn’t explicitly a separate file/version.
But after some more demoing, I’m not sure I’ll update my version 5. Somehow I’d have hoped that two versions later somebody would have done something about the clunky 1990 GUI and the archaic workflow.
Especially with SDS modelling, the whole command centred thinking is just in the way.
So my current plan would be to continue doing SDS modelling in Blender and only turn to Rhino for conversion if a client really needs NURBS models and update Rhino on demand in that case.
Cycles in Rhino, the other thing I was curious about, feels very dumbed down from what Cycles in Blender can do, may be okay for very simple things, but everything is so clicky and longwinded and simplified to death and absolutely not helped by the crappy GUI.
Without nodes, it’s a really crippled thing, like a horse with the legs cut off…
Also, Version 7 doesn’t seem very mature for a release version, I mean dual GPU rendering isn’t exactly bleeding edge? I use it for ages…?
But yeah, doesn’t matter too much, it seems Rhino still isn’t really for me and probably will always stay in the “use if I have to” category.
Cheers and all the best,
Tom