The NT admins I work with assure me that Internet Explorer always uses binary mode for FTP transfers. Tests with my PC to and from my Solaris workstation preserved the Zip file integrity (a very large Zip file with text, images, and subdirectories).

I suspect the Zip file in question is already corrupt possibly from a previous FTP. Try using the FTP client from your PC rather than Internet Explorer for the file in question and check its integrity.

Good luck.