If you want to install another operating system on Simics/ARM, it must be a statically linked binary in either ELF format or some format that can be loaded straight into memory without modification.
If you have an ELF binary that you want to install, you use the load-binary command. It loads an ELF file into memory and performs the necessary relocation. The arm-sa1110.simics script uses the load-binary command to load the Linux kernel directly into the memory of the simulated machine.
If you instead have a binary in some format that can be loaded straight into memory without modification, you can use the load-file command. The arm-sa1110.simics script uses the load-file command to load the RAM disk and faked bootloader information directly into the memory of the simulated machine.
If you are trying to install another Linux kernel, you must use the plain vmlinux file, not the Image file used to install Linux on a system that boots from a disk.