I am using dotnetzip - I am using the following file as a reference - Ionic.Zip.dll
I have it currently point to a location from my C: drive. I usually use NuGet so not aware of how where I would put the .dll so that when it is promoted to Production, it runs from the server.
Right click on "References" folder/node in your Solution Explorer and choose "Add Reference". It will popup a dialog box which has the option for you to browse to the DLL file.
By default VS will copy the DLL to your project's output directory.