1nme – No the Arduino executable is not being renamed. What you are doing is setting up a command string to be executed later when you have finished your editing and then want to try to compile the program. In your NPP session, after saving your recent modifications you would select Run>ArduinoIDE, the Arduino IDE would start up with the ino file you have been editing loaded. You hit CTRL-R and hopefully the compile operation is successful!
To make my installation work properly, I had to add quotes like this:
"C:\arduino-1.0.4\arduino.exe" "$(FULL_CURRENT_PATH)"
The first string enclosed by quotes is of course the full path reference to your Arduino IDE. So when executed, it causes the Arduino IDE to run. The second string enclosed by quotes is a variable loaded by NPP and contains the full path to the .ino file you are editing. On my system a typical value of $(FULL_CURRENT_PATH) might be: “D:\Arduino\Sketches\Blink\Blink.ino”.
You can get more information in NPP on use of the Run menu item by selecting ?>Help Contents>Command.
Good Luck!