1. Is it safe to assume that I can have nested folders in a ZIP file (to hold content, audio files, etc)? Yes, the imsmanifest.xml is always in the root directory!
--It should be safe to assume that you would be able to import a course that has a file structure of folders inside the zip you are importing. However, depending on how the LMS handles the importing of courses, a zip within a zip may cause problems. You may encounter an LMS that will think that that zip within the zip is another course within the course and then choke when it finds no imsmanifest inside the internal zip... this is something that you will need to ask the LMS provider.
2- If a module registers as complete in SCORM Cloud, why does it NOT work on another (both 1.2 & 2004)? Isn't the point of SCORM standardization?
--That is exactly the point of SCORM standardization and although our LMS is typically more tolerant of all of the SCORM specification and behaviors that go along with it, other LMS's may not like a certain thing that your course is doing. The trick is finding out what that is. I would look to see if the LMS has some sort of debug log where you can see what is going on during runtime. If that is not the case, you can probably launch the course in their LMS, then run some tool like Firebug (which runs on Firefox) to see if anything pops up.