Instructions
Turn off your PlayStation 3 and disconnect your PlayStation 3's Ethernet cable, the grey cable leading to your router, from the back of the PlayStation 3. This puts the entire PlayStation 3 in offline mode.
Sign out of the PlayStation Network through the "PlayStation Network" icon on the main menu if you do not wish to unplug your Ethernet cable, or if you are on a wireless network. Signing out of the PlayStation Network will also set all games to offline mode.
Insert the "Demon's Souls" disc into your PlayStation 3 and either begin a new game or load a saved game.
Select "Cancel" when the "You are not signed in" message box appears.
Select "OK" on the "Start the game in offline mode" message box that appears. You can now play "Demon's Souls" in offline mode.