I think I may have found the problem Xrystal.
At least: I THINK this is the problem (and if not it's probably a good place to start).
I spent a bit of time on this issue this morning and it turns out that this is not a new issue at all i.e. I've now seen reports detailing this very issue dated as early as 2007 when the issue first became apparent with IE7. It would appear that it has something to do with PHP, a thing called 'zlib compression', and IE download requests.
From what I gather: the default zlib compression ON THE SITE can cause a WinZip file to get compressed TWICE using the zlib compression.
Here is an exact quote that I found:
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Turning off the default php zlib compression for IE browser download requests (and letting header content-length default to chunks) fixes the corrupted zip problem.
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Here is a link:
http://moodle.org/mod/forum/discuss....&parent=599707
(Just continue to log in as a guest and you'll have access to the thread).
And another one:
http://www.dslreports.com/forum/r176...s-not~start=20 Look for severach's post halfway down the page.
Alternatively: use Google and search for some key phrases from the above quote and you'll find many references to this issue.
What I DO NOT understand is that it appears to affect various different combinations of IE7/IE8/XP/XP Home/Vista etc. It does not seem to affect ALL users ALL of the time.
From what I gather it's a 'server side' fix.