I think ya missed the point. (see previous post saying "changed extension")
The problem was with Winzip. Using Winzip alone to create the compressed archive created the "compression" error. Bootskin didn't recognize it.
So....instead of using Winzip, I tried other archiving tools...and found that using Winrar, and checking "ZIP" instead of "RAR" as the file type...I could then change the extension and have Bootskin import the file.
For those that don't use Winrar, or do have it but don't see what I am talking about:

One thing you did mention, Jafo, you said "zip your skin folder". Does that mean, that when creating bootskins, you're supposed to have them in separate folders, right click, and zip the entire folder? Because, I do my work mostly from the desktop...selecting all the files, right click, then "add to zip...". Wonder if that might have been why Bootskin didn't recognize it.