Hi Peter,
if you have a valid custom address locator service, you should get a green check mark in ArcGIS Explorer Application Configuration. There is something wrong with the path, I guess.
That said we've identified the issue that custom address locators are not working correctly in 1200 from Find window, and will have a fix for it in 1500.
Meantime, I'd like to ask you to share link to your custom address locator service, if it is a public one, so I can test ArcGIS Explorer against it?