I just installed Inspector XE 2011 Update 10 (build 233717) and any binary I navigate to when creating a project returns a "File xyz.exe is not executable binary." error. This is on Windows 7 Ultimate SP1 with Visual Studio 2010, and happens both integrated into VS2010 and when using the standalone version of IXE.
Strangely, if I browse for another file and then return to the original file, the error message sometimes does not appear. When using IXE integrated into VS2010 that's a bigger problem since the VS2010 project dictates the binary.