When you archive in PDMWorks Workgroup, it basically moves the files from the Vault area into the Archive folder. Typically, these folders are on the same machine, so you're really not saving any disk space. What you'll want to do is backup the archive folder to tape or DVD and store for future restore needs.
Since the vault doesn't compress SolidWorks files, I don't see how the archive process would compress them either. It's simply moving them out of the vault.
I would recommend that you create a test folder and check disk space, then archive and check disk space again if you want to be certain.
Hope that helps.
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