I regularly send html files to free.kindle.com; they have to be double-zipped. Dunno how this applies to a *.prc file, which I assume is what you're sending. Indeed, a *.prc file is
what I get back from Amazon from my double-zipped html file!
You might ask this question on the Amazon DTP forums:
http://forums.digitaltextplatform.com/dtpforums/