A validation function (in WinRAR code) is being called before extraction of ACE archives. The validation function inspects the filename field for each compressed file in the ACE archive. In case the filename is disallow by the validator function (for example, the filename contains path traversal patterns) The extraction operation should be aborted and no file or folder should be extracted. However, the check of the return value from the validator function made too late (in UNACEV2.dll), after the creation of files and folders. It prevent the write operation to the extracted files only.
In WinRAR versions prior to and including 5.61, there is path traversal vulnerability when crafting the filename field of the ACE format. The UNACE module (UNACEV2.dll) creates files and folders as written in the filename field even when WinRAR validator noticed the traversal attempt and requestd to abort the extraction process. the operation is cancelled only after the folders and files were created but prior to them being written, therefore allowing the attacker to create empty files and folders everywhere in the file system.