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maybe Antivirus? What AV do you have?
Otherwise did it work before and stopped working now or?
In general PA does not handle permissions at all, it uses Windows functions. Meaning something is not letting it work with files properly. Maybe you have set it to run under another user or something similar, some compatibility options?
If I understood correctly, it wont even extract files to your desktop? Thats not an option :-). Something is wrong.
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