I am trying emulate this :
1. Open Explorer and navigate to an image (test.xml for example)
2. Press CTRL+C
3. Open Wordpad
4. Press CTRL+V, and the image (test.xml in this example) appears
Ah, that's better.
The code you showed works fine in Windows Explorer. Run it, go to a empty folder and press CTRL+V (or right click and paste).
You see that it works for copying files in Explorer.
For pasting in Wordpad you need to copy it a different way.
Try a Clipboard viewer to see what's on the clipboard when you copy a file.
You'll see a FileList entry (which is for pasting in Explorer etc) and another format.
You need to emulate that format (I'm currently not sure what format that is, probably a CF_OBJECT - Any persistent object).
(Or with CFSTR_FILECONTENTS and CFSTR_FILEDESCRIPTOR)