I downloaded the basic Hello World xpi from Mozilla, and it installed in my Firefox without any problems. Then I unistalled the addon, unzipped the xpi, then, without changing anything inside it, zipped it again using 7zip. I tried to install it, and Firefox gave me a "This addon could not be installed because it appears to be corrupt" error.
Unzipping the .xpi produces a folder with the same name as the .xpi, with its contents. To create a working .xpi, zip the contents of that folder, not the folder itself.
Credit goes to nmaier.