I had to fix this on a clients PC the other day where they had decided that Adobe Reader might be a better program to open ZIP files rather than the built-in capability of Windows (or any other decompressing utility for that matter).
This is how I fixed it.
First, check in Folder Option that the ZIP file extention is associated with Windows Compressed Files or something similar. If you are using programs like WinZIP or WinRAR. Reinstalling or reassociating the program should be enough…
However, if you are using the built-in Windows function, I also had to do this:
From Start > Run … type and run the following: