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This happens when Windows doesn't have enough permissions to write to the output folder. Windows is using ACLs to check who can write what and where. If you're trying to extract directly to your local server's root it will most likely not work unless you give Full Access privileges to your user for that directory.

I would suggest copying the archive in your Documents folder, extract it in a sub-folder there and then copy the files to your local web server.

Please remember that Windows doesn't have a notion of permissions. It does have the notion of ACLs (Access Control Lists). If you're wondering, yes, you seem to have an ACL setup which doesn't allow applications not runnign as Administrator to write to that folder. Fixing them? Good luck with that. It can be as simple as granting a few security permissions to your user for that directory to something as complex as having to create a new group, add your user into it, muck around with permissions hierarchy,... Can you guess why I gave up on Windows 3 years ago? Maybe the easiest thing to do is extract to desktop and transfer the files with Windows Explorer.

My experience with Windows is that if you try to write files into the Program Files and/or Program Files (x86) folders you need the process to run with Administrator privileges or greatly water down your ACL settings to give Full Access to Everyone for the folder you want to write to. The other alternative is using a dedicated directory for your favourite Apache/MySQL/PHP package in the hard drive's root, but sometimes Windows seems to require you to do the same kind of ACL watering down even in this case. It's Windows. It just doesn't make sense.