Like some others I am having a problem with SIT files and I found the following in my System.Log file which seem to relate to trying to extract a SIT file:

Sep 22 23:00:08 simon-wolfs-computer kernel[0]: HFS: /rsrc paths are deprecated (..namedfork/rsrc)

However, BetterZip also produces empty folders so I am now wondering if this is a problem in the OS rather than with your application. I am running 10.4.7 on an 2 GHz Intel Core Duo MacBook with 2 GB DDR2 SDRAM.