Does the humifider only run when the furnace is heating or is it runing on demand by itself?

It is running pretty much all the time. It cycles the furnace fan to come on at a speed that is lower than when the furnace is generating heat.

The problem with humidification is that the indoor relative humidity is a function of both the evaporation rate of the humidifier and the air infiltration (leakage) rate for the home. Under conditions where the outdoor air is cold and doesn't contain much moisture and the air leakage rate is high, your humidifier may not be able to move the r.h. needle. I suspect that's what is happening. If you know the air changes per hour from a blower door test, and the evaporation rate (flowrate supplied to the humidifier minus the flowrate of the water going down the drain) you can run the numbers and determine if that's indeed the case.