In addition to the above steps you have to specify the directory where the extracted files should be created.
It can be given in the ``Working directory'' field in the file selection handler. Another possibility is to prepend the names of the files to be extracted with the full drive and directory specification. So it is equivalent either to specify A: \FOO \BAR as the working directory and *.C as files to be extracted or to specify A: \FOO \BAR \*.C as files to be extracted.