Hello,
This behavior is normal. This error is displayed by the Operating System, not by SEP, and is a result of the Application Control policy intercepting and blocking the attempt to launch the process.
The error may be different depending on which type of process is trying to launch the blocked executable - launching from a CMD console window may give the error "The system cannot execute the specified program", while launching from the Explorer GUI gives the "The handle is invalid." message.
Incase, you you could disable the Policy or the Application & Device Control, you may not get that message.