I uninstalled Internet Explorer from my Windows 7 machine and set Google Chrome as the default browser. Adobe Flex 3 exhibits the following behavior:
Use internal web browser -> Flex tries to start iexplore.exe, which fails.
Use an external web browser, by default System Web Browser → Flex tries to start iexplore.exe, which fails. (Note that the default browser is Chrome)
Use an external web browser, Chrome (manually added) → Flex launches Chrome correctly.
So, if someone had the same problem, just add Chrome manually. It is located in C:\Users\(user)\AppData\Local\Google\Chrome\Application\chrome.exe .
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