To clarify a possible misunderstanding: You can't open a zipped file within
Word through the File > Open or Insert > File dialog, not even when you have
an external program like WinZip. You must first unzip the file (also called
"extracting" the contents of the zip file), putting the resulting file(s)
into a regular folder. Then you can open those files with Word or another
viewer/editor.
Windows XP should be able to handle zip files without any extra program --
in Windows Explorer a zip file appears as a subfolder (but with a special
icon that's supposed to be a folder with a zipper), and you can double-click
that subfolder to see the files within it. Copy the files from there to a
regular folder before opening them. WinZip does add some features to the
basic capabilities of Explorer, but you can decide whether they're worth the
price.
