Hi @osacode
The FeatureWriter typically will not zip written datasets by default, but it is a configuration option from the Dataset parameter's drop down menu. I'd first make sure that the Zip Output option is unselected and that the specific format doesn't specify a *.zip extension as output.
I'm curious what service is this job using at runtime? I noticed that the pictured items are named with similar formatting that the Data Download service uses for temporary datasets (these would be saved to Resources > System > temp > engineresults). If that is the case, the Data Download service does indeed zip output by default. Where possible, I wouldn't recommend using the Data Download service output for downstream operations. Instead, I may opt to save the FeatureWriter's datasets to the TEMP folder (Resources > Temp). The macro for this folder that you might use in the FeatureWriter is $(FME_SHAREDRESOURCE_TEMP).
In cases where zipped datasets are an inevitable output, the Directory and File Pathnames Reader and be configured to read the contained filenames within an archive.
Hope that helps!