Ok, I've figured it out finally.
1. Used 7-Zip instead of WinZip for unpacking the archive - everything works fine.
2. Binary comparison on *.ifo files reveals WinZip converted CR to CR+LF.
3. Google "winzip convert cr lf" reads:
*** Select the "Miscellaneous" tab from the Configuration Window to control these options: ..... -> "Other" -> "TAR file smart CR/LF conversion" - When selected, this option determines if "smart" CR/LF conversion should be performed when extracting from TAR files, blah, blah, blah...
Now wondering how come nobody else stumbled upon this problem. I know using WinZip is not fashionable these days
, but that's what comes by default on my windows machine..
Maybe that's too much to ask, but dictionary app could be little bit more intelligent too, and if not understand CR+LF then at least give some diagnostic message.