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> There is a key point about the demon that when he is 'sorting' the particles into two bulbs or rooms, that the gate he is working on is frictionless.

Exactly. Maxwell's Demon is a magical construct. In reality, any active device that sorts molecules into high and low energy bins would take power to run, and would generate more heat (or other entropy) than it removed by doing the sorting.

While what you said is true, it sort of misses the point. The thought experiment demonstrates that there is some quantity being added to a system each time the demon opens or closes the gate, and that quantity is information. Now we have a relationship between information and entropy.

Edit: I think you might be speaking to my point that in the end it evens out, and that natural selection in turn does create entropy even as its generating information.

I think that was Schrodinger's argument in "What is Life": nature seeks to maximise entropy, and life does a very good job of it.

That theory has gotten a bit more elaborated these days: http://rsif.royalsocietypublishing.org/content/10/86/2013047...

I thought the idea with Maxwell's daemon was that detecting the particles heated it up which made the particle detector less accurate.