Do not tick the ISO-box as Winrar is not really suited for extracting an .iso file.
When you rightclick on a .rar file, you see this
- Open with Winrar I never use it because great chance it will tell you that Winrar is not for free.
- Extract files It asks you for a destination folder for the extracted files.
- Extract here It will extract in the folder your .rar is in. Beware it could mean a lot of loose files in your folder.
- Extract to …. name of the rar-file you rightclicked on This option neatly extracts the .rar into a new folder with the same name as the .rar
I always use the last option, but of course it’s up to you.