I am having the same problem. I cannot extract ZIP files in Plex Hosting.
I followed your instructions. When I click on the Extract button, I get this error message:
Unable to extract /httpdocs/Maps/Phones/app283.zip: Unable to start (C:\Windows\system32\cmd.exe /c C:\Program Files "(x86)\Parallels\Plesk\admin\bin\7z.exe t -tzip G:
\PleskVhosts\davidapps.net\httpdocs\Maps\Phones\app283.zip "): (1260) This program is blocked by group policy. For more information, contact your system administrator.
at Plesk impersonation(PipeServer::ServerThread::impersonateRunAs line 726) at Unable to unpack archive G:\PleskVhosts\davidapps.net\httpdocs\Maps\Phones
\app283.zip(UnpackArchive::onRunAsUser line 2709)
Note: I am logged in as the Plex Admin.
The zip file is not corrupted. For a test, I zipped two small files. It gave me the same error message. This was working a few weeks ago. The message says there is a Group Policy that is preventing the 7z.exe program to run.