Click the "Tools" menu, then select "Folder Options". Go to the "file types" tab. Select the .c files from the list and click "advanced". Select the "open" action and click "edit". Finally make sure you have the following in the "apliication" field.

"C:\Program Files\GStudio7\sed.exe" "%1"

The "%1" is the important part including the "s !! Replace the path to sed.exe as needed...