A dummy variable (or vector) is one that can have only 2 values, 0 and 1, to indicate the presence or absence of some characteristic.
It helps if you don’t try to define terms, but provide sample file instead with the problem, expected result, and steps tried.
Lengthy titles are not appropriate for this site. Also, the question is not clear. You tried something; that’s a good start. Now tell us exactly what you tried, and in what way it failed. See guidelines for asking.
Your question is stale now. Excel definitely can solve regression problems with dummy variables, although it is some time since I did it. I have not tried with Solver, but would be surprised if one of the solver engines can not do it. Once you have set up your equations, start Solver and select the options button. There are a number of engines that you can select from as well as other parameters you can try.
IIUC, OP didn’t declare Excel to be unable doing that.