You might want to try a epub to epub conversion on it.
The mimetype file must be the first file in the zip container and must be uncompressed. If you are manually building the .zip container, you would add it first and uncompressed and then add the rest of the files/directories.
As for the content.opf file? You state that it exists and is exactly where the container.xml file says it should be. Since you do not show an OEBPS directory in the root of the zip file, and the container.xml shows that as where the content.opf file is to be found—the full-path="OEBPS/content.opf" gives that information, it's hardly surprising that epubcheck errors on it. You may want to check the contents of the Masquerades of Spring directory.
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