Virus - The version of this file is not compatible with the version of windows you're running

After you mentioned fixing this in XP before, you made me remember a reg file one of the other admins at my job keeps on his FTP. I have used it once on a users PC who was having the exact same issue as you (only he had xp) after I removed some malware. I figure I will post it here since it may help you out, even if it just points you in the right direction:

[HKEY_CLASSES_ROOT\.exe]
@="exefile"
"Content Type"="application/x-msdownload"

[HKEY_CLASSES_ROOT\.exe\PersistentHandler]
@="{098f2470-bae0-11cd-b579-08002b30bfeb}"

[HKEY_CLASSES_ROOT\exefile]
@="Application"
"EditFlags"=hex:38,07,00,00
"TileInfo"="prop:FileDescription;Company;FileVersion"
"InfoTip"="prop:FileDescription;Company;FileVersion;Create;Size"

[HKEY_CLASSES_ROOT\exefile\DefaultIcon]
@="%1"

[HKEY_CLASSES_ROOT\exefile\shell]

[HKEY_CLASSES_ROOT\exefile\shell\open]
"EditFlags"=hex:00,00,00,00

[HKEY_CLASSES_ROOT\exefile\shell\open\command]
@="\"%1\" %*"

[HKEY_CLASSES_ROOT\exefile\shell\runas]

[HKEY_CLASSES_ROOT\exefile\shell\runas\command]
@="\"%1\" %*"

[HKEY_CLASSES_ROOT\exefile\shellex]

[HKEY_CLASSES_ROOT\exefile\shellex\DropHandler]
@="{86C86720-42A0-1069-A2E8-08002B30309D}"

[HKEY_CLASSES_ROOT\exefile\shellex\PropertySheetHandlers]

[HKEY_CLASSES_ROOT\exefile\shellex\PropertySheetHandlers\PEAnalyser]
@="{09A63660-16F9-11d0-B1DF-004F56001CA7}"

[HKEY_CLASSES_ROOT\exefile\shellex\PropertySheetHandlers\PifProps]
@="{86F19A00-42A0-1069-A2E9-08002B30309D}"

[HKEY_CLASSES_ROOT\exefile\shellex\PropertySheetHandlers\ShimLayer Property Page]
@="{513D916F-2A8E-4F51-AEAB-0CBC76FB1AF8}"

If you want to try testing this back up HKEY_Classes_Root first, then paste the above text into notepad and save it as .reg then double click the file to import it. You made need to do it in safe mode. If it works for 7 please let me know!

UPDATE

I tried to import this key in an (ill advised) attempt at testing to make sure this wouldn't hose your PC. Windows 7 didn't take the file not really sure why... I don't have the time to look at it right now but I hope it at least points you towards the keys you should be looking at.