So in windows 10, with the default settings Steam > Forged alliance fails to open and gives the message?

Have you tried opening the program just using the executable? What happens? Have you tried changing compatibility settings on the exe? Right click on the exe, properties > compatibility. Try playing with all the settings. Running an in the 640 x 480 mode should at least run it, from there you can then change the resolution to whatever you want. Forged Alliance changes registry settings after it runs so your compatibility settings wont stick.

When FAF loads Forged Alliance the entire folder has been duplicated, with the relevant changes made to balancing etc.

Forged Alliance that is loaded by FAF and contains all the new balances.
"C:\ProgramData\FAForever\bin\ForgedAlliance.exe"

Default FAF install location with steam
"C:\Program Files (x86)\Steam\steamapps\common\Supreme Commander Forged Alliance\bin\SupremeCommander.exe"