non-existent folders aren't created when extracting
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7-zip doesn't automatically create non-existing folders
when extracting files. You have to click the [...]
button, then create a new folder in that dialog if
you're extracting the files to a non-existing folder.
If you skip this step, you would get an error message
like "can not open output file [name]"
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I can confirm this. This is indeed a nasty problem.
On Windows 98 here.