The supposedly "canon" variant of him is that Sonic.exe himself is a demon or some sort of entity made out of dark matter who took on the form of Sonic the Hedgehog to torture/kill his prey.
The other, more popular variant (and the one shown here in the drawing) is that Sonic.exe IS Sonic the Hedgehog; it's just that something has corrupted/possessed him. In my honest opinion, this makes more sense than the "canon" version by JC (though I may be a bit biased, considering how I hated the original story AND the remake.)
Considering how much an egotistical pile of trash JC is (Like, he threw a tantrum when his "masterpiece" was deleted FFS), I say that you can interpretate Sonic.EXE in any way you want.