Yes, that's it. It is very unlikely for an archive to contain so many consequent zeros (unless the Copy method is used). I believe your disc has got some damaged sectors; they are likely to be remapped already, but the data is lost. (You may check this guess by examining your disc's S.M.A.R.T. attribute 05).
I am sorry, but, speaking generally, your files are lost unless you have their back-up copy. To be more precise, if the archive's header is encrypted independently of the solid blocks, it is possible to recover the files that, being compressed, fit the area between each solid block's beginning and the first damage after that point. However, 7-Zip cannot do that - you will need a special software based on 7-Zip's code. Whether such software exists - I don't know.
P.S. I think you should double-check your disc and back up other important data to avoid further losses. If it is a hard disc, I insist on examining its S.M.A.R.T. data. There are many programs that can query S.M.A.R.T., Victoria for example. If you post a screenshot here, I'll try to give a prognosis on your disc.
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