I extracted the contents of the .zip file into C:\Program Files (x86)\Wadsmoosh and run the .exe from there.
I'm not 100% sure but I think modern Windows security practice is to not let applications write to any files in c:\Program Files\. It wants to keep a strict separation between programs and the data (settings, documents) they generate. I would suggest extracting and running WadSmoosh from a directory that you have full, non-administrator read/write permissions for. That should allow WadSmoosh to output the PK3 to the same directory.