I never thought I would find a True Colors demo tape, but in the last few weeks I stumbled upon two of them. Rare and hard to find as they are I took the chance and bought all two. Even more lucky as I was, I found two different versions.
The first version I found has a yellow cover with a white insert. The tape used to record these songs is just a regular tape that is found in stores. The kind of tape with the brand and the duration on, amongst other things like the A-B-side.
EDIT: The first press seems to be the blank tape with the white cover and green insert. Thanks Timmy! (read comments)

The other tape is blank with nothing on it. And has a white cover and green insert. So I took a picture of both of them, so that you can compare these two:

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