Ok, it took some time, but I got it figured out. There were a few issues. You will need to replace the following:
Zip C:\Users\skochkr\Desktop\TEST.zip $Files
If(Test-Path C:\Users\lostd\Desktop\TEST.zip)
{Remove-Item $Files2}
with
foreach ($File in $Files)
{
Set-Location "C:\Users\lostd\Documents\purge\"
$Zipname = $File.Name.Replace(".", "-")
Zip C:\Users\lostd\Documents\purge\$zipname $File
}
sleep 5
foreach ($File in $Files)
{
Remove-Item -Force $File
}
This will zip each file in $Files
individually (instead of making one zip file with all the contents inside) whilst it keeps the same name and extension type. The destination of the zipped file also needed to be set to the desired location, otherwise the zipped file was sent to the folder where 7-Zip is located.