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What a bunch of baloney. I'm accessing a zip file on my network share and I have to deal with this dialog every time. What's more, you can't get rid of the problem for mapped drives.
If you see this error, it means two things. First you have IE7 installed. Second, you are irritated.
Fortunately, this can be fixed. There is a hotfix for this problem, but it doesn't seem to be released publicly. I've requested the hotfix, and Microsoft has promised to get back to me within 8 hours.
Fortunately, I've found a way to get around this for the time being - although I don't like it as a long term solution. It turns out that no matter what you do, mapped drives end up in the Internet Zone instead of the Local Network zone that has fewer security restrictions. To get rid of the message temporarily, go to Control Panel, Internet Options. Select the security tab. Choose Internet. Now click on "Custom Level". Scroll Down and see the option for "Launching Applications and Unsafe Files". Change it from Prompt to Enable.
This disables prompting for launching files from any web site, which I see as a bad thing. I don't use IE except for one particular site anymore, but the IE browser is heavily integrated with the operating system and anywhere somebody has embedded a browser activex control, it uses IE's settings. In a nutshell, I wouldn't leave that setting in place for any length of time.
Your best option is to request the hotfix, barring that, use unc paths (\\servername\share\) to access shared files, or wait until the hotfix gets released.
Once the hotfix is in place, you will need to go into your Internet Options control panel applet and update the Local Network settings on the security tab so that your mapped drive is included in the database of local network resources.
Talk About Zip Files Insecure
