kovidgoyal, thanks for the suggestion, but still no go

I'm using b10, both calibre gui and the convert command are giving the same error when I try to convert the zip file to lrf:
Code:
Traceback (most recent call last):
File "main.py", line 1172, in convert_single
File "calibre\gui2\tools.pyo", line 36, in convert_single_ebook
File "calibre\gui2\convert\single.pyo", line 97, in __init__
File "calibre\gui2\convert\single.pyo", line 130, in setup_pipeline
File "calibre\ebooks\conversion\plumber.pyo", line 400, in __init__
File "calibre\ebooks\conversion\plumber.pyo", line 447, in unarchive
File "calibre\ebooks\conversion\plumber.pyo", line 458, in find_html_index
ValueError: Could not find an ebook inside the archive
Otherwise, the archive dragged to calibre is showing the metadata, but view only shows the archive contents
ps: Interesting thing is that on my archives (created by zipping txt file, opf file and the cover image) I don't get such "Could not find an ebook inside the archive" error, I'm able to get the book properly import, but cover is missing. If I drag the text file from the uncompressed archive - cover shows. And still can't get embedded images to show.