Store bought demi-glace will not dilute back to stock.
Water, which is restaurantese for "profit," is sometimes a good idea, but not so much here, I think. On the way to making derivative sauces, demi is usually diluted with stock, wine or spirit; not water. And for good reason.
My suggestion for beginning your lamb gravy would be to dissolve the demi in a mix made of two parts beef stock, and one part chicken stock; plus a healthy slug of a "smoothing" wine such as madeira or a dryish sherry to cover the canned taste of commercial preps. I would also use a lot of parsley, possibly in a sachet, for its penchant to tone down some of the artifacts of commercial preparation, and generally "smooth out" tastes. Commercial demis are rough.
Remember you're starting with something that already has aromatics far in the background. So consider adding some onion and carrots somewhere in the process to kill their staleness in the demi. There's also more than enough salt in most demis to alert the diners' taste buds. Watch the salt, taste carefully as you go. If appearance is important, fine sieve it to get rid of lumps and bubbles. Then take it from there.
If demi is not the only option, and you're committed to beginning with a commercial product as close to veal stock as possible, I suggest using the best beef stock you can find, with a touch of roast chicken stock base added. It's a cheat, but more like veal stock than working backwards from demi. If you're going to do anything that relies on the high colloid content in veal stock, you'll have to do something to pump that. A butter finish, for example. And again, plenty of parsley, booze and watch out for salt.
Yours in short-notice saucing,