%TempDir% would work on all systems as well. I like to work with variables though, for their flexability.
The reason I asked the question about the file.open dialog, it you are trying to open the file from %SrcDir%\myfile.exe and not from "C:\temp\myfile.exe".
The information on "Recurse subfolders" and "Use internal zip folder names" is from the ZipFile.Extract action. Open that action and look at the Actions tab. It is under the "Unzip to folder:" dialog.
Here is the actions list you posted with a few changes I made using the information from my last two posts.
<IR_ACTIONS_LIST>
<Action name="Set Value">
<Type>6</Type>
<Function>0</Function>
<DTIndentLevel>0</DTIndentLevel>
<Enabled>1</Enabled>
<ErrorHandling>
<UserNotificationMode>0</UserNotificationMode>
<CustomErrorMessage/>
<OnErrorAction>0</OnErrorAction>
<JumpToLabel/>
</ErrorHandling>
<Variable>%ZipPW%</Variable>
<Value>nkjh898uyGTfreDCjn76581245Rfrew</Value>
<Evaluate>0</Evaluate>
</Action>
<Action name="Extract">
<Type>131</Type>
<Function>0</Function>
<DTIndentLevel>0</DTIndentLevel>
<Enabled>1</Enabled>
<ErrorHandling>
<UserNotificationMode>1</UserNotificationMode>
<CustomErrorMessage/>
<OnErrorAction>0</OnErrorAction>
<JumpToLabel/>
</ErrorHandling>
<ZipFileName>%SrcDir%\myfile.zip</ZipFileName>
<FilesToExtract>*.*</FilesToExtract>
<Delimiter/>
<UnzipToFolder>%TempDir%</UnzipToFolder>
<RecurseSubDirs>1</RecurseSubDirs>
<UseInternalDirs>1</UseInternalDirs>
<UsePassword>1</UsePassword>
<Password>%ZipPW%</Password>
<OverwriteOptions>2</OverwriteOptions>
<ShowDialog>1</ShowDialog>
<DialogTitle>Unzipping Files</DialogTitle>
</Action>
<Action name="Open">
<Type>7</Type>
<Function>0</Function>
<DTIndentLevel>0</DTIndentLevel>
<Enabled>1</Enabled>
<ErrorHandling>
<UserNotificationMode>0</UserNotificationMode>
<CustomErrorMessage/>
<OnErrorAction>0</OnErrorAction>
<JumpToLabel/>
</ErrorHandling>
<FileName>%TempDir%\myfile.exe</FileName>
<Verb>open</Verb>
<WorkingDir/>
<RunMode>0</RunMode>
</Action>
</IR_ACTIONS_LIST>