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This has tripped up a lot of people, myself included, and impacts both extension writers and extension users. Have you ever tried to install a ColdFusion Builder extension and gotten this error?
If you get this, it means the extension writer incorrectly zipped his or her extension. When you create a zip file from an extension folder, it is critical that you zip from the directory itself and not from the parent. Does that make sense? Probably not. Here is the right way to zip an extension in Windows - it should be similar for fruity machines:
It may be a bit hard to see in this screen shot, but I'm inside the extension folder itself. This will create a zip where ide_config.xml is in the root.
The wrong way is to create the zip from above the folder. This is how I always make my zips which I think is pretty natural for folks too. It's also why you keep seeing this mistake happen:
Here is another way to see the difference. I opened both up in WinRAR. You can see the one on the left has ide_config.xml in root, while the other has the folder itself.