C:\Program Files\Unknown\fail.exe...ok
C:\Program Files\Unknown\wine.exe...fail
C:\Program Files\Unknown\c.dll...ok

with open(b'C:\Program Files\Unknown\text.txt', 'r') as file1:
    read_file = file1.read().encode('utf-8')
    pattern = "\w.+\.\.\.fail"
    file_re_fail = re.findall(pattern, str(read_file))
    print(file_re_fail) # выводится весь текст =(
    if len(file_re_fail) > 0:
        print ("Fail!")
    else:
        print ("Проверка завершена")

with open('test.txt') as file1:
    read_file = file1.read()
    pattern = "\w.+\.\.\.fail"
    file_re_fail = re.findall(pattern, read_file)
    print(file_re_fail)
    if len(file_re_fail) > 0:
        print ("Fail!")
    else:
        print ("end")

with open('test.txt', encoding='utf-8') as file1:

print(file_re_fail)

print(*file_re_fail)