When you’re using an “external” tool for handling ZIP archive file (and the likes), it can be really annoying when you double-click on such a file in Windows Explorer (or other file browsers) and Windows treats the file as a compressed folder and doesn’t start the external application even though file associations are correctly set.

Some tuning tools like XP-Antispy are able to disable the functionality of compressed folders, however it didn’t work for me on Vista the last time I tried.
After a while of research I found the solution how to edit the registry, so that double-clicking associated files will truly be opened with the external application:

Deleting the following two registry keys and restarting Windows will disable compressed folders (or “Komprimierte Ordner” as they are called in the German Windows):

HKEY_CLASSES_ROOT\CLSID\{E88DCCE0-B7B3-11d1-A9F0-00AA0060FA31}

HKEY_CLASSES_ROOT\CLSID\{0CD7A5C0-9F37-11CE-AE65-08002B2E1262}

I found the solution here, where you will find .reg files for automated removal (and adding the keys back to the registry).

After you reboot, compressed folders should be turned off.

Update 04/14/2010:

As pointed out by Mark, the above instructions don’t fully work in Windows 7 due to some permission restrictions. Here are the additional steps you need to do in Windows 7 (credit goes to James):

• Right-click “Permissions” on the two keys mentioned above when browsing the registry editor
• Click “Advanced”, tab “Ownership” and select your username (which needs to be an administrator)
• Check “Replace owner on subcontainers and objects” and click “OK”
• Back in the permissions, select your username (or “Add…” it if it’s missing) and grant “Full Control”

Now you can delete the key(s) after you have performed those steps (for each key).

Update 05/20/2010:

One user reported his screen went black (on his laptop) after applying the .reg files (under Vista). I don’t know whether there’s a direct connection or whether it was just coincidence, but he let me know that after a (manual) reboot, everything was fine again – including compressed folders being disabled.