Unfortunately you will not be able to send Freeserve mail out, as you rightly say, but you will be able to receive it. You'll only be able to send Demon mail. No way round it (as far as I know...I'll be glad to be proved wrong)
If you were so set to stay with your Freeserve email - it has to be asked - why didn't you elect to go for Freeserve Broadband??