How do I uncompress/unzip within Emacs

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To uncompress a .zip file, you just need to add to the variable 'dired-compress-file-suffixes

(eval-after-load "dired-aux"
   '(add-to-list 'dired-compress-file-suffixes 
                 '("\\.zip\\'" ".zip" "unzip")))

Now the Z key in dired will recognize the .zip extension and uncompress a .zip archive. Already supported are gunzip, bunzip2, uncompress and dictunzip.

If you want to mark files and add them to a .zip archive you can use the following to make z bound to zip the set of marked files:

(eval-after-load "dired"
  '(define-key dired-mode-map "z" 'dired-zip-files))
(defun dired-zip-files (zip-file)
  "Create an archive containing the marked files."
  (interactive "sEnter name of zip file: ")

  ;; create the zip file
  (let ((zip-file (if (string-match ".zip$" zip-file) zip-file (concat zip-file ".zip"))))
    (shell-command 
     (concat "zip " 
             zip-file
             " "
             (concat-string-list 
              (mapcar
               '(lambda (filename)
                  (file-name-nondirectory filename))
               (dired-get-marked-files))))))

  (revert-buffer)

  ;; remove the mark on all the files  "*" to " "
  ;; (dired-change-marks 42 ?\040)
  ;; mark zip file
  ;; (dired-mark-files-regexp (filename-to-regexp zip-file))
  )

(defun concat-string-list (list) 
   "Return a string which is a concatenation of all elements of the list separated by spaces" 
    (mapconcat '(lambda (obj) (format "%s" obj)) list " ")) 

To zip files, open the directory in dired. Mark the files you want to zip with m. Then type

! zip foo.zip * <RET>

To extract an entire archive from dired you can mark a file and run & unzip, just as you would in a shell.

zip-archive mode will allow you to browse zip files in a dired-like fashion. It should come with recent versions of GNU emacs and will be used by default when you visit a file with the .zip extension. From this mode you can extract individual files into a buffer, and from there save them with C-x C-s.