Filed by @KirkMunro on UserVoice (emphasis mine):
"The Expand-Archive and Compress-Archive cmdlets in the Microsoft.PowerShell.Archive module each have several parameters that take in a file system path. These parameters currently only support standard file system paths (behind a drive letter or a UNC share) and not PowerShell FileSystem paths which may include a custom PowerShell drive (e.g. Documents:\myfile.zip). This support is easy to implement and should be added (I'd add it myself if this module was open source, which it should be).
The workaround is to explicitly use standard file system paths, either via the Resolve-Path cmdlet or by using them verbatim in your command invocation."
Obviously, I'd love for you to help out here, Kirk. ;)