WordPress.org

The zip file uploads, but the contents aren't extracted

Try this: Open up the upload-media-by-zip.php file and locate WP_Filesystem() (line 257). Surrounding it are three lines labeled 1, 2, and three. Uncomment those.

This problem happens only on some server setups, I haven't experienced it personally which makes it difficult for me to provide a better solution. If you have one, please share.

The tabs in the media pop-up are all crazy

Sounds like you're using 2.8. Update.