I feel like I'm missing something veeeery simple and I've been at this for a few hours now.
I agree!
So first of all,
by default there should already be a Game Profile called "World of Warcraft Launcher" in your existing WoW "Game" (maybe all of them) added to Inner Space. You can use Add Game as you've done, which is fine, but point it at World of Warcraft Launcher.exe in the WoW folder rather than directly at battle.net -- otherwise, ISBoxer will be unable to generate the WoW Addon for you into the correct WoW folder.
Let's assume you've done this part correctly. I don't think you failed at using Add Game, or having WoW in your Inner Space games list. Without touching ISBoxer yet, test what Inner Space will launch when you use this Game Profile. To do that, just select it directly from the Inner Space menu, instead of selecting your ISBoxer Character Set. When you do this, ISBoxer won't be active at all, just Inner Space.
Confirm that when you launch the Game Profile yourself in this way, Battle.net launches as you have intended. Once you've done that, close Battle.net! Almost done!
At this point you have confirmed a working Game and Game Profile for ISBoxer to use, and now you just need to make sure this is assigned to the appropriate Characters. When you're creating a new team using the Quick Setup Wizard, ISBoxer will automatically select "World of Warcraft Default Profile" by default -- you will want to make sure to change that or it will be launching the client directly. So for any Characters already created, go into the top left pane in ISBoxer under "Characters" and select each one. Then in the bottom right pane, in the General tab, find the "Inner Space launch information (required)" box with Game and game Profile drop-downs. Make sure this matches the one you confirmed to be working! Do this for each of the Characters you want to adjust.
Now, there's one final step before you're done: Export to Inner Space. After Exporting to Inner Space, the changed settings will be loaded into Inner Space, so that when you launch your team it will use the updated settings. Without Exporting, the settings loaded into Inner Space will remain untouched.
That's all.