Archive utility hangs at 5 seconds remaining
Anything interesting in the console app (system.log or other activity)? Any chance you accessed any of these files from another app? Mail.app is notorious for never "closing" attachment files, so you might need to close the apps that might have the files open. It's hard to know what's causing it without attaching a debugger to the process and seeing where in the code is working or waiting.

If there isn't a lot of other activity - (i.e. quit every app you can - maybe all of them if possible) and then use fs_usage to see what file activity is ongoing from the command line/terminal.app:

sudo fs_usage -w


The other avenue is a split half search. Kill the hung process and compress half the folder at a time, narrowing down to a specific file that's causing compression issues. It might just be bad luck and the next time you try to compress all will be well.