WMG / Sonic.exe

Warning! Spoilers ahead!
Sonic.exe is an alternate Fleetway Super Sonic.
A sadistic psychopath trapped in the form of the blue blur? Adding to the creepiness factor, Sonic.exe could originate from the infamous bad ending of Sonic 2 (8-bit), where it's implied Dr. Robotnik killed Tails. If so, perhaps the extreme rage coupled with the Chaos Energy created Sonic.exe?

Sonic.exe is actually Kefka.
If you read the story, it SPECIFICALLY describes Sonic.exe's laugh as Kefka's Noblewoman's Laugh — oddly specific, unless it was Foreshadowing. In fact, Sonic.exe is also pretty similar to Kefka when you think about it: they're both Faux Affably Evil, Ax-Crazy, and have pretty serious God Complexes. Perhaps after Kefka got his ass handed to him in Final Fantasy VI, his spirit hijacked the Sonic.exe disk, and had Sonic murder his friends For the Evulz.

Maybe this is Kyle's elaborate prank to Tom
Kyle probably knew that Tom is gullible to believe just about anything and that he was a total coward. So what Kyle did was he stayed quiet and didn't speak to Tom for two weeks, got some of his buddies who know their way around making video games to cook up this "haunted" Sonic the Hedgehog computer game with all these stolen assets from other video games that would scare Tom like a kid watching Friday the 13th, had someone else to make the bloodied stuffed demonic Sonic doll, and another person to pose as the mail man to ship the CD to his mailbox. Kyle, lurking somewhere around Tom's house, plays the waiting game until he finished the level with Dr. Robotnik, where he then sneaks in Tom's room like a ninja to plant the doll on his bed, took out a voice-changer so he'd sound demonic and screw with him at the last minute.
  • This troper just has this to say- this might be the greatest reason the WMG pages on TV Tropes exist! That was incredible!

Sonic.exe was Robotnik's most powerful Sonic copy ever.
Robotnik came up with a reality warping sonic copy designed to overpower all of Sonic's friends in a way that makes fighting back literally impossible. Its abilities showed the ability to break the fourth wall and even kill humans outside of the game. Being a self-aware AI, it was quick to turn on its creator. For whatever reason, it killed Sonic's closest friends and archnemesis first, and waited until it was actually able to get on a Sega Genesis Cartridge To kill Sonic himself, thus getting closer to validating its god complex.

Sonic.exe is actually Turbo.
It's so obvious! Not only do they both have a big Cheshire Cat Grin, but just like Sonic.exe, Turbo invades a kid-friendly game, disguises himself as a friendly character, and uses this form to deceive and hurt the other characters. They both also get The Fourth Wall Will Not Protect You moments! Also, the Creepypasta borrows a lot of elements from other games. It would make sense considering that Turbo loves game-jumping.
The Eldritch Abomination's name is "X" because whoever named him that was doing a half-assed attempt at a Take That! to Sonic X.