Trudy, I think we need a bit more information on what you did. When you said "I set up uft on my zip drive", what did you do exactly - what files are on the zip disk? Did you put an archive file on the zip disk, and if so did you save your libraries along with the database files? You said "I can run the program from the c drive using the zip data", that implies you have both your database and your library files in uncompressed format on the zip disk, within a directory structure compatible with UFT. Is that true? Did you move both the project and library directories back to your c: drive?
I hope these questions give you some things to think about and try out. However, to have a good chance of getting help, you will have to be more precise when telling us just what works, and what doesn't, what files you are working with, and what steps you went through.