Recently I lost the ability to expand zip files as compressed folders in Vista. a quick search of the web and I found this:

1. At the start prompt enter “cmd /c assoc .zip=CompressedFolder”
2. If necessary, Open regedit, navigate to the above path and delete the UserChoice node
   [-HKEY_CURRENT_USER\Software\Microsoft\Windows\CurrentVersion\Explorer\FileExts\.zip\UserChoice]
3. Restart Windows

remember editing the registry can be dangerous, so always backup first or create a restore point.

Source

from http://blogs.msdn.com/tims/archive/2006/09/18/windows-vista-secret-1-open-command-prompt-here.aspx

Right-click on any folder on your Windows Vista machine while holding down the shift key. You’ll see an extra context-sensitive menu item there: Open Command Prompt here. Just click on this menu and a command window will open with the current working directory set to the folder’s actual location.