That's exactly what I did. I replied No to the request to install into FSX SE. But when I check the values in the "Date modified" column for dll.xml and exe.xml it says 19/05/2015 for both. If these files were modified today by the GSX installer, wouldn't the "Date modified" reflect that?
Assuming you are looking at the *correct* XML files (which, if you replied NO to the question about installing into Steam, are under %APPDATA%\Microsoft\FSX and NOT FSX-SE! ), they would be modified only if the installation completed without errors, which ( as it seems from your other message ), doesn't seem the case, because you said you still said the error on about the XML files, and if there's an error, they are not being touched.
However, it wasn't clear from that message, if when you said you tried to reinstall a 2nd time, you replied NO to the question about installing into Steam, which is something you are adding now.
I can only confirm that:
If your FSX:SE registry keys are still there from a previous installation together with FSX, but you haven't uninstalled/reinstalled FSX:SE after removing FSX in order to give a chance to the FSX:SE installer to set the registry keys correctly ( and assuming the FSX:SE uninstall WILL remove the now obsolete FSX:SE registry keys, which is not certain, so better check and do it yourself if they aren't...), which is what is causing this problem, answering NO to the request to install into Steam will complete the installation correctly, and still recognizing FSX:SE properly.
We'll probably update the installer to double-check, and verify the existence of the folder containing the XML files, but that would just be an additional foolproofing to make the installer more resistance to non normal situations like yours.
The normal situation should be:
1) FSX:SE installed alongside FSX = separate registry keys and folder locations for config files under the FSX-SE registry and folder name
OR
2) FSX:SE installed stand-alone = use of the same registry keys AND folder locations as FSX
BOTH #1 and #2 are correctly handled by the installer.
Yours is a different case, which is FSX:SE installed stand-alone, with folders under FSX, but with FSX-SE-specific registry keys coming from a previous installation when FSX:SE WAS installed along side FSX, so the folders were probably missing (as a result of uninstalling it), but the registry keys were still there, so the real issue it's likely the FSX:SE uninstaller that doesn't clean up everything.
But again, we'll surely add this case too.
ANOTHER possible solution, would be simply removing the FSX-SE registry keys with REGEDIT, the "AppPath" key, under this section:
HKEY_CURRENT_USER\Software\Microsoft\Microsoft Games\Flight Simulator - Steam Edition\10.0
If you remove this entry (assuming you have FSX:SE with NO FSX installed, and FSX:SE installed/reinstalled when NO FSX was installed ), the installers will work just the same, and it's probably the best solution, because I think other installers might be easily fooled by this.
