This is a long-standing Windows XP annoyance, and every time I rebuild a PC or buy a new one, I have to rummage around the web to find the fix.
Well not any more – here is the definitive fix (well, it works for me)…
1. As an administrator-level user, open a command prompt window
2. Run the command regsvr32 /u %windir%system32zipfldr.dll
3. Close the command prompt window
4. Use My Computer to get to your Windows system32 folder
5. Rename zipfldr.dll to zipfldr.dll.old
6. Run WinZip and click Yes when it asks to be re-associated with Zip files.
You’ll need to make sure you can see file extensions in My Computer (another annoyance for another day!).