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Are you accidentally in flat list mode? Try pressing ⌘2 to get back to outline view mode. Or use the view menu to switch mode. If that's not the problem, can you please send me a screenshot via e-mail illustrating the problem.

Update: It was indeed the flat view. If, at some point, you should miss your folder hierarchy in BetterZip, check the View menu to see whether you really use the Outline View.

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