Update on progress, no fixes yet.
zlib works fine for png and zip files. However none of these use the gzopen (etc.) routines.
Checking the source for gzopen, it appears that open, read, etc. is used NOT fopen. The open, read, etc. code in the SDK appears to wrap around fopen, fread.
My hunch is that the open, read, write code is broken (either subtly or badly), however I've not researched this further so this is not definitive. Any thoughts?