Zip files usually have to be unpacked before the contents can be accessed. This is especially true for installation packages that come as a zip file. Executing the setup from within the zip file could lead to problems if other files contained in the package are required for the setup to execute properly.
Pismo File Mount Audit Package can mount zip files but also iso, compact iso, compact file set and private folder files as virtual folders on the system. That’s an excellent way to access and execute the contents of a zip file without having to unpack it first.
The software supports a wide range of Windows operating systems including Windows 2000, Windows XP, Windows Server 2003, Windows Server 2008 and Windows Vista both in 32-bit and 64-bit editions.

It integrates itself nicely in the Windows Explorer right-click menu and becomes available only on supported file extensions. Files can be mounted from all available locations including network devices and removable media.
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Martin you seem to be forgetting vista and open zip files on itself.
http://screencast.com/t/yZAPdB6lya
Dark Kosmos I have that option turned off in my Vista notebook. Can you install applications this way?
Haven’t tried but if installing files is just opening a program you can, I don’t know if it will load additional files though.
darkkosmos@
Explorer can extract files from ZIPs, and does some nice UI tricks and automation to streamline simple operations, but it is not the same thing.
PFM exposes the contents of the ZIP file through the file system, not through explorer UI. You can open a cmd prompt and see the files, open documents in place with (no hidden temp files), programs can be executed and all needed DLL support files and such are loaded directly from the zip, etc..
Have used MagicDisc for a long time, but with the extra features I will definitely give this a try.
I recommend another great tool, It can do what pismo do, also it can do what pismo couldn’t do.
Winmount(www.winmount.com) is a powerful windows utility which is dedicated to managing files and disks impressively and conveniently. WinMount supports compressing files to MOU RAR ZIP 7Z, decompressing and browsing MOU ZIP RAR CAB ARJ ISO GZ BZ2 TAR WIM files.
WinMount can mount MOU RAR ZIP to a virtual disk or a local folder, which enabling you to use the files inside directly without extraction, saves your time and disk space dramatically.
WinMount is also an image tool, supports mounting ISO ISZ BIN MDS/MDF NRG IMG CCD CUE to virtual DVD-ROM, supports mounting FLAC, APE, WV, WAVE to virtual CD-ROM, supports mounting VHD, VDI, VMDK, WMT, Microsoft WIM, and folder as a HDD virtual disk.
In addition, WinMount can create a new blank RAM-disk, size from 64M to 4G, data will be lost when restart.
WinMount also can mount MOU RAR ZIP to a virtual disk or a local folder.
see more ( www.winmount.com/feature.html )
Mount Zip Library of ShetabTech also is library that can be used for programmers to mount zip file in their application process at runtime without installing any component or need any administrative privilage.
see more:
1) http://mountziplibrary.codeplex.com
2) http://www.shetabtech.com/english/MountZipLibrary/default.aspx