5. Your game can be compressed in any way you see fit (ZIP, RAR, ARJ, etc).
so you could even use your own compression program, as long as it is possible for them to get it. But I suspect they expect ppl to use only widely known compression fomat, like those they named.
And instead of worrying about compression format and all, the best is to use compressed/small sized media (JPG/MP3/MOD instead of BMP/WAV) and a game design that don't need tons of different medias.
My game is at beta-testing stage and it is
10MB uncompressed
7.38MB sitted
7.35MB zipped.
6.63MB rarred
I really think about adding in a 8MB divX for the intro

or maybe as an easter egg ?
'Klaatu barada nikto'