In kde3, I used to be able to select a few files from konqueror, right click and then compress as...

In KDE4, when I do this from dolphin, ark compresses the files but puts them within a bunch of **** folders including the full path of the files...why??...

I've tried to open ark directly, select the files and then compresses them, but I still get the full path folder structure inside.

So to clarify, the zip or tar.gz archive will have
/big/long/path/to/files/file1,file2,file3

instead of
file1 file2 file3

I would consider this a bug, as tar, etc. do not behave in this manner. I was unable to find an existing report so please report it at bugs.kde.org.

Ok, I found the problem.

I have a link on my desktop that points to a partition containing my documents. When I access the files this way, the aforementioned problem occurs with ark. However, when I browse to the folder using the proper path, everything works as expected.

I noticed this weird behavior before with Dolphin. It doesn't display the real path when you open a link. So for example, if I have a link on my desktop to a file at
/data/docs/folder1

then Dolphin will display
/home/username/Desktop/data/docs/folder1

and this is precisely when the problem with ark occurs. I never understood why Dolphin does this. Then again I don't understand a lot of "features" in KDE4.

Like bcooksley mentioned, this sounds like a bug, so you really should report it.

already reported:

https://bugs.kde.org/show_bug.cgi?id=191821