Ok so here's a question that is probably quite basic, but here goes...
You said I should only put the <li> into the template, so where do I put the rest of the markup?
<div class="demo">
<ul class="gallery_demo_unstyled">
<li><img src="$Image.URL" title="$Caption.EscapeXML" alt="$Title.EscapeXML"></li>
</ul>
</div>
I can't help but feel that this is a bit beyond my level of SS knowledge, if anyone wants to help out... just let me know.