Workbench can't see downloaded firmware
Trick is I'm relying myself on Win7. No issue about firmware install related to windows path length. If you get a look to System Workbench itself files you'll see even longer paths ...
On my side having a try to unzip firmware file relying on 7-Zip within an artificially deep repository I'm not getting issue.
I'll try to get a try on a Win10 host just in case.
In the meantime as sounds you're able to extract manually required firmware on your desktop. Could you have a try to set your desktop path as first path within System Workbench > Firmware installation preferences search path ?. Have a new try then to create a project. Firmware install should occur relying on such first path ...
Please share back !