Disable ZIP/CAB in explorer folder list (Windows 7)

Delete the following reg keys:

ZIP files: HKEY_CLASSES_ROOT\CLSID\{E88DCCE0-B7B3-11d1-A9F0-00AA0060FA31}
CAP files: HKEY_CLASSES_ROOT\CLSID\{0CD7A5C0-9F37-11CE-AE65-08002B2E1262}

To be able to delete them you need to give yourself permission. Yes, it's stupid/silly/broken but necessary.

Right click on the key and select "Permissions".
Click on "Advanced".
Click on the "Ownership" tab.
Click yourself.
Check the box for "replace owner on subcontainers and objects"
OK

Under "Security" tab, give yourself full control.
OK

Now delete the key.

Note: You'll need to reboot or kill and restart explorer.exe from the task manager for the changes to take effect.