Darkness falls across the land...the midnight hour is close at hand...creatures crawl in search of blood...to terrorize y'all's neighborhood. It's Halloween month everyone! It's during this fun spooky time where us villains reign! So I will be focusing only on villains for character threads for this month. And what better way to begin this creepy month with a creepypasta!

With all that being said, here is the character thread for Sonic.exe (Icon and image by Arion Rashad)

Who is Sonic.exe? 
That...is a very good question. There are many interpretations of the character. Some say he is Sonic possessed/turned evil, an alternate version of Sonic, a robot, a virus created by Eggman (which is my preferred interpretation), or this character I've never heard of called Zalgo. While I can't really say who exactly this character is, what I can tell you is where he originated from. He first appeared in the creepypasta story of the same name on September 3, 2013. The story was written by JC-the-Hyena.

To summarize, a kid found a CD which had a program called "Sonic.EXE" the game did wacky and goreish stuff killing off Knuckles, Tails, and Eggman. The full creepypasta is right here: https://www.creepypasta.com/sonic-exe/

What can he do?
It depends on the interpretation. If we are taking the original creepypasta, he can fly, break the game he is in, fourth-wall-breaking abilities, teleport, and can kill whoever he pleases. 
If we take the virus interpretation (according to the Miitoons summary of the character which you can view here), he can corrupt any electronics and turn them against people, trap people's minds in the digital world and toy with them.

Theme Song?
Here is Hill Act 1/size]
[size=small]https://www.youtube.com/watch?v=pZ6hSMFi2Qg

I am new to the virus interpretation. I sort of like it, though I'd almost prefer it a hybrid origin, that in an alternate pocket dimension or reality, Eggman creates this sort of virus to destroy Sonic, but ultimately it just infects him and changes him into the entity we see in Sonic.EXE (the original fan game based on the Creepy Pasta). Not to write on anyone's ideas, but it would be the perfect way to marry the two ideas of origin and power into one! It also probably shows my love for Resident Evil, the idea of a virus transforming a creature into a sort of vile weapon of evil.

Also, I've had the song playing as I've typed through this as well as the post I left in reply to the other thread where you alerted me to this thread, and I feel so wonderfully sinister now in the most fun of ways. hehehehe

I believe I have seen some interpretations like how you've described. I really like that idea since it could leave Sonic in utter despair in the aftermath of his destruction if he ever recovered from the infection.

There are a few songs based on Sonic.EXE I would highly recommend taking a look at since you liked Hill Act 1.

"Yσυ'ɾҽ Tσσ Sʅσɯ" by SilvaGunner: https://www.youtube.com/watch?v=skc0xutWjso

There is also a lyrical cover of this remix that I really like by Juno Songs: https://www.youtube.com/watch?v=eTzprddDBwo

But one song I really like to listen to while brainstorming is Victor McKnight's piano cover of Hill Act 1: https://www.youtube.com/watch?v=eRiOgQ7Pm84

Of the three, the Piano cover of Hill takes my highest interest! The other two are fun, but being mashups of Sonic songs in a remix style fashion just doesn't punch as hard for me as good old Hill does in terms of the sinister, mysterious, and almost hopeless feeling EXE would probably illicit in you if you encounter him! The calm yet terrifying nature of Hill is a blend that puts one in a state of natural discomfort in such an exciting way!

Oh! Something I would really recommend checking out is this Twitter artist who goes by the name revie_03. She has done some excellent (also disturbing) sprite work for Sonic.EXE which I LOVE. I'll share a few of her posts here (blood warning but considering how this is Sonic.EXE that shouldn't be surprising)
https://twitter.com/revie_03/status/1330164377404706821
https://twitter.com/revie_03/status/1330395409404076040
https://twitter.com/revie_03/status/1331631547166941185
https://twitter.com/revie_03/status/1332219078111604736

Oh my goodness I LOVE IT! She got a follow from me right straight away for that crafty work! That makes EXE even darker and more spoopy than normal, and if I may quote something my favorite Youtuber would often say in a moment like this, "We like that!"

Yeah, her work is excellent!

One thing I really like about the original creepypasta is how oddly specific some of the details are. Examples like Kefka's laugh from Final Fantasy VI and the Creepy Cavern music from Earthbound. The writer was very specific with certain details like he knew SOMEONE was gonna make a fan game out of this .

Oh, to be sure! I bet a lot of folks who construct Creepypasta or just fun 'what if' tall tales hope the idea will take and cause stuff like that to happen!

I honestly have not played any of the fan games for Sonic.EXE though. I have seen Markiplier play one but that's about it.

I played the initial one they made that became viral. I'd heard about it from MegaGWolf at the time. And then, someone did a hack of I believe Sonic 1, where after a while the screen would go static and when it came back, rings subtracted your ring count and EXE would slowly chase you. If you hit a monitor though, it would revert back to normal for a short bit. The challenge was to beat the game without EXE getting you.