I have the same issue. Using Demul 5.7 on a Windows 7 64 bit machine.
If I match the windowed mode to the same resolution as my full screen there is no flicker. No problem. It's only when I force full screen by pressing ALT + ENTER that some games (not all) will flicker. A couple that I noticed are Extreme Hunting and Demolish Fist.
The only thing I can think of is set full screen mode in Demul to match your monitors full screen and center the window as carefully as you can to fill the screen. The Windows bar at the top can be minimized if you press F3. At least that will get rid of the menu portion.
Running Demul with the latest version of Direct X may help:
http://support.microsoft.com/kb/821981
Does this same issue occur in earlier versions of Demul? Version .56 or earlier? Or is it a new bug that didn't get fixed in the latest version?