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. This is the best option for adding folders of downloaded DLC’s to your installation folder|
|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 right-clicked on||This option neatly extracts the .rar into a new folder with the same name as the .rar
Beware: This option will create a folder within a folder, f.e. folder EP01 within the folder EP01