Can't seem to change difficulty level

[Raw Kryptonite]

Go through the training missions. Finishing Realistic training unlocks Realistic game mode, Sim training unlocks Sim mode.
You can do the mandatory first 3 and that unlocks Realistic training. You can skip to that, which will unlock Sim when you finish it. Then train sim. Best to go through it all, there's a lot more to it than there was in the demo.