As far as I know, Windows XP handles zip files as folders and make its search within zip files too.
To avoid this you have to unregister the “zipfldr.dll” and, after that, make the PowerArchive association again.
To unregister (“Start>Run”):
regsvr32 /u c:\windows\system32\zipfldr.dll
To register again (default XP):
regsvr32 c:\windows\system32\zipfldr.dll
I have done it in my system and all went fine. Make a Restore Point just in case…