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Are you trying to upload an entire zip file, or the contents of the file? Makes a gigantic difference. I have a feeling you want to do the latter.
To keep you from getting confused, let's try it this way.
1. I suggest you make a folder somewhere on your hard drive and call it XOOPS. Inside of it, create three more folders
Main - store your main XOOPS files here
Modules - for any new modules you may pick up in the future
Themes - for any new XOOPS themes you get
2. I'm guessing that the zip file you want to upload is XOOPS main package. If it is, move the zip fiie into the folder called Main.
Once it's there, right click on it. A context menu should come up. One of the options is Winzip. Use your mouse to Open the submenu and choose "Extract to Here."
3. Open your FTP program and navigate to your public_html folder. Open the folder.
If you're going to be putting your XOOPS site in a subdirectory of public_html, now it the time to create the subdirectory's folder if you haven't done so already. If not, leave your FTP program open.
4. Go to the folder on your hard drive that contains the files you unzipped. If you're doing a XOOPS install, the files and folders you'll be looking for follow this structure:
cache
class
images....
You need to copy those files to whatever you decided on earlier. Just drag and drop them into the appropriate folder in public_html.
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If this isn't about installing XOOPS by FTP, and you just wanted to know how to FTP/unzip in general, you can still follow the basic directions for unzipping and uploading files to wherever you need to place them.