This is very true. I'd summarize your post in the following statement: Non-technical people normally will judge the completeness of your application by the UI you present.

The corollary would be: If you want to avoid frustration, demo half-finished software with an at most half-finished UI. If the UI is perfect, but the backend doesn't work, your boss will be very astonished why it takes you so long to finish your job since "everything is already working".

Note, by the way, that this is not meant to be demeaning to non-techies -- not at all. It is just normal to judge things by outer appearance if we lack the understanding of the inner workings, and it takes an effort to make yourself understand that you need to look closer. It happens to programmers as well, just in other areas.