Running the very same exe of Paypal demo on Windows10 ver 1607 or even Windows 7, the Paypal sandbox login page is displayed properly and can proceed with payment approval.
Perhaps TMS engineers can confirm the above and possibly consider a patch, though I'm not sure is really required since having a different scope from "FEATURE_BROWSER_EMULATION" registry setting.
Thank you for confirming the issue is resolved. This must be machine specific configuration issue as we this doesn't occur on our test configuration that has exactly the same version of Windows 10 and IE installed.