M. Hamer, a Microsoft forum agent and moderator, explained this issue on October 23:
There is a known issue in the Windows 10 October Update where the consent prompt “Do you want to replace these files” is missing when copying contents from a .ZIP file.
With the Windows 10 October 2018 Update, if you copy or move files from a .ZIP file (without first “extracting” the contents) in to a new destination folder that contains duplicate filenames or is write-protected, you don’t get a“Do you want to replace these files” prompt. It will appear that the files were overwritten, when in fact the copy action for those files is not executed and files have not been overwritten.
That all sounds a little dry and boring, but it’s serious: You could lose data when working with zip files! In fact, he goes on to warn more about this more explicitly:
Important: Do not attempt to Cut and Paste items from a compressed (.zip) folder. This may result in unintentionally deleting items that may not be recoverable.
Microsoft is working on a resolution and estimates a solution will be available in early November for this issue.
After all the bad press, we can’t imagine Microsoft will want to re-release the October 2018 Update with another bug that can potentially lead to data loss. This one doesn’t seem quite as bad as automatically deleting entire folders during the upgrade process, but it’s still not great. And, if Microsoft starts rolling out the update with this bug, it’s sure to bite some people. That means Microsoft has to wait until November.
Please, if you work at Microsoft and you’re reading this: Don’t do it. Wait until November. Fix the data loss bugs first.
Of course, there’s no official confirmation that Microsoft will delay the update. We recommend you avoid clicking “Check for Updates” any time soon.
In the meantime, if you’ve already upgraded to the October 2018 Update, be careful when working with Zip files in Windows. We recommend using a third-party file extraction program, like 7-Zip.