This is really strange. Here are the steps to reproduce:
- A folder, say "c:\users\me\test", contains 2 files "a.txt" and "b.txt".
- Zip the folder "test" with if with right click > Send To > Compressed (zipped) Folder: this creates "c:\users\me\test.zip"
- Open the created archive, so that:
- dest tab = c:\users\me\test.zip\test
- source tab = c:\users\me\test
- Create a new file c:\users\me\test\c.txt
Now comes the issue:
- If I issue the command "Copy", c.txt is copied to the archive.
- If I issue the command "Copy TO=ask":
- The dialog "Select Destination Folder" appears, with "Folder:" filled with "c:\users\me\test.zip\test"
- If I press OK, I get a popup saying "The folder "test" does not exist. Create this folder?"
- If I click "Yes", I get a new popup: "An error occurred creating folder 'test': Cannot create a folder when that folder already exists.'
There must be something wrong with the machine... 
