The problem is most likely that you don't have unzip
installed.
If you have 7-Zip, add its directory under "Program Files" to your PATH environment variable. When I did that and restarted Emacs, it automatically recognized it as unzip
alternative and configured itself correctly (i.e. the variable archive-zip-extract
was set to ("7z" "x" "-so")
).
Ideally, it should be possible to use Java's own jar
program for this, but apparently it doesn't support extracting individual files to stdout which is the way Emacs' arc-mode works.