I, too, purchased BetterZip recently, and I have the same version of (1.6.2) as stax. I also have the same problem that stax reported here: any special characters (by that I mean any ASCII characters higher than decimal 127 in the ASCII character set) make BetterZip up-chuck on the file containing the offending character(s). I get the same message too -- BetterZip thinks I've assigned a password to the offending file, when in fact I have not. At least BetterZip doesn't corrupt the entire archive because of the offending file! The workaround is the one stax suggested -- remove the high-order ASCII character(s) from the file and re-ZIP it.

As stax also noted, Apple's Archive utility doesn't stub its toe on these "special" files -- nor, I might add, does Stuffit Deluxe (I have version 10.0.2 of that program). One by one, I'm trying to migrate *all* my Stuffit archives to BetterZip because Stuffit will, on occasion, corrupt entire archives, at which point I can't get them back or restore them, which is unacceptable to me.