>Am I doing something wrong in zipping it?

No, but as Al Doman pointed out, if you encrypt the .EXE file during compilation, the encrypted file is not very compressible; IOW, you'll get little if any benefit from compression. If someone holds a gun to your head and forces you to distribute on a floppy disk, then use the commercial version of WinZip to create a ZIP file that spans multiple floppies, or use one of the file split/join utilities.

FWIW, at $1-2 each for blank media, you'd be much better off and waste far less time just buring the file onto a CD; the odds are good that the whole executable will fit on a single 650MB CD-R...