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So if the next char in the file is a '0' the color of the next pixel should be black
and if '1' the color should be white.

How are you creating an image and setting its pixels using the...

The code needs the 1.7 javac.

What problems are you having?

Can you explain how the "0"s and "1" from the text file are to be used to create an image?
What is the size (width and height) of...

I assume you mean: Yes the text is "1011100". The file contains the characters: '0' and '1'.

Have you fixed the compiler errors yet? The posted code does not compile without errors.
If you need...

What do you mean by "contain binary"? Do you mean that the file contains only the characters '0' and '1'?
A sample line from the file would be a String like this: "0010101100".

The posted code...