Why not just use Perl, DBI and DBD :: ODBC? I hate DTS.

use strict;

#use DBI;

#use DBI qw(:sql_types);

use Compress::Zlib;

open FH, "<file.gz";

binmode FH;

{ local $/ = undef; my $filetext = <FH>}

$filetext = Compress::Zlib::memGunzip( $filetext );

# now either parse your file and insert records

# using a statement handle (see perldoc DBI)

# or just write the file out and call bcp

open FH, ">file.txt";

print FH $filetext;

close FH;

print `bcp ...`;

Seriously, I'm sure you can get it to work in DTS. I bet there are some activeX controls for ZIP you could embed into a DTS script. In any case, a web search might find a solution, such as this use of the WScript.Shell object:

http://www.sqltalk.org/ftopic17451.html