Version 1.0.5 of the Multi Install component works around this limitation by moving the uploaded zip package to a different directory before attempting to unpack it. You can download it here and you can view further detail on the ZipArchive bug here.
The PHP ZipArchive class, the windows temp directory and Multi Install v1.0.5Written by chris
For those of you using the multi install component on a site that runs on a Windows server, you may have run into the message, "The file did not unzip properly". This error occurs due to the fact that the PHP class ZipArchive cannot open files stored in the C:\Windows\Temp directory. This is because the php process runs as a IUSR_XXXX user and it doesn't have the correct permissions to access the file.
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