You have dropped both files and folders on an archive that requires the use of an external archiving utility such as ARJ or LHA.
Due to limitations in the external utilities, this operation may not yield the results you expect. Specifically, it will archive all occurrences of files with the name(s) you specified found in all subfolders of the folder containing the file(s) you dropped.
For example, if you drop the file C:\MYSTUFF\README.TXT plus any folder, you will archive not only C:\MYSTUFF\README.TXT but also all files named README.TXT found in any subfolder of C:\MYSTUFF.
To avoid this problem, simply drag and drop files separately from folders.