No, using this method the Zip files are never directly read or written by LV. LV calls the Winzip program through a command line executable and instructs it to zip the files. Therefore, you would write your data files normally (with open, write, close, etc.) and then call Winzip to compress them. You'd probably also want to delete the origial data file (using the delete VI in LV) after it has been zipped to save disk space. Keep in mind that with this method, you still have to have enough disk space to store the file temporarily. If you want to compress the files before they are written to disk then you should look into the compression utilities at OpenG. Alternately, you could use file VIs which can compress data automatically such as the HWS VIs (these ship on the NI driver CD and are a really useful for writing large files). Also, dealing with large data in LV can get really slow if you don't do it properly, below is a link to a really good tutorial on various techniques for managing large data (the HWS files are also described in this tutorial and there is a link at the end of it to another set of compression VIs in LV).
Regards,
Ryan K.
Managing Large Data Sets in LabVIEW