Version 4.02 had the initial conversion utility in it. This was causing problems for some in trying to convert the files. So for 4.03 and until they can fix it to convert all formats, they disabled it. If you import new ones then it will convert them but that is the only conversion going on currently.
If you are having problems still with these files, replace them with your back-up copy (you do have a back-up....don't you
) and they should play. Zip files are being allowed to play for now from your database, but cannot be temporarily imported from a singer's disc.
Hope this clears up the misconceptions and questions.