Unable to unarchive file into "Desktop" (Error 1 - Operation Not Permitted.)"
this does mean that the zip could not be created properly and is corrupted. It's not related with a permission issue.
Getting this error about mb_convert_encoding means that you don't have this function compiled in your php (!). Which distribution is it ?
I would advise you to download and install the latest php from entropy.ch . This is the one I installed to make sure wipha works on php5, and it does.
Now, will this completely solve your zip issue ? I hope and I believe so, but I won't garantee it. Let's try...