This error means (in the case where you are not dealing with spanned zip files) that the ending header of the zip file was not found. In this case, Xceed Zip will assume that the ending header is located on another disk and raise the InsertDisk event. Since the event is not handled, error 517 (InsertDiskAbort) will be returned.
Make sure that you are dealing with a valid zip file. Usually a good test is to try to extract the contents with WinZip or another zip application.