Query on W3C Link Checker Capabilities

Hi
I would like to know whether the W3C Link Checker checks for the 
relative path of the files before throwing an error for a broken link. I 
think it doesn't.

I have my htm files put up in a top level folder called html. I got two 
sub folders for img_txt and Images that contain the alternate text htm 
files and all the gif files respectively.

I zip the top level folder, the path info in the zip file is relative 
for img_txt  htm files and gif files.

When I run the zip file through the W3C checker, it shows broken links. 
Why is that?

Please clarify?

-- 
Regards
Rahul Prabhakar
Technical Writer - CRM
Oracle India Pvt. Ltd.
PBC (First Block)
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#9 Hosur Road
Bangalore, INDIA
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Email: rahul.prabhakar@oracle.com