Now that I'm in the office... yes, the problem is that you have selected a self-extracting zip file (.exe) instead of a regular zip file (.zip). Go to Transmittal Setups as mentioned above, modify and the first option (Transmittal package type) should be Zip, not self-extracting executable as you have it already set-up.
ctopher, changing the destination folder won't change the fact that he's creating a self-extracting executable file, which he is unable to email due to ISP limitations.