What does the pec fly machine target?

If you feel it in your arms, you are using the machine incorrectly.....

Concentrate on your pecs, getting a good contraction and a full stretch as you slowly go through the movement.

For a really good chest workout, do what Mike Mentzer recommended.
He suggested doing pec deck to the point of positive momentary muscular failure and to immediately (in three seconds or less) follow it with incline press (such as a smith machine, or on a traditional bench with dumbbells or a cable incline flye.
If you do this properly, you should not be able to do more than two such supersets and the second set will be very difficult and very brief however, you will have induced the adaptive response that will lead to muscle growth and a strength increase.

Shouldn't feel it in biceps, the motion doesn't even use biceps. Your arms shouldn't be changing the bend during the range of motion.