After a session with a friend I belive I have a way to make the Unpacker work for anyone.
The following assumes you are running Windows 98 and have a default install. If you dont have a default install Im sure you can figure out the changes necessary (wink).
I must give credit where credit is due and thanks too leemon for finding the key to this solution puzzle. 
I will try to spell this out in a step by step fashion. 
1. Open a folder with a packaged activity in it.
2. From the tool bar at the top of the folder select "View" then "Folder Options".
3. Select the "File Types" tab.
4. Scroll down the list of Registered file types untill you find "Packaged Activity".
5. Highlight the Packaged activity and press the Remove buttong. Dont let the warning box scare you were going to fix that in the next few steps.
6. Now select the "View" tab of the folder options.
7. Look under the Advanced settings for a check box labeled "Hide file extensions for known file types". Make sure this check box is NOT checked.
8. Click the okay button and you should be back at the folder.
9. Look in the folder contents for a file with the .apk extension and right click on it. Select the "open with" option.
10. The open with dialog box should open. Select the "Other" button.
11. Now navigate your way to "C:/Program Files/Microsoft Games/Train Simulator/Utils/tsunpack.exe". Highlight that and click okay. You will return to the open witih dialog box.
12. Press the Okay button of the open with dialog box. You will recive an error message stating the all too familiar "Failed to open package". Now dont cry were almost done. Click the okay button and you should return to the folder again.
13. Select from the folder tool bar "Views" then "Folder Options" and select the File Types Tab. Look familiar ? Good. There is one change though you will now find a listing for APK File.
14. Highlight that listing and press the "Edit" button.
15. In the Actions box high light the "open" and press the edit button. You should see "C:\Program Files\Microsoft Games\Train Simulator\UTILS\tsunpack.exe" in the Application used to perform action box. If not lather rinse repeat (steps 1 through 14).
16. Now edit the listing in the App. used box and add the "%1" to the end. Dont forget the space. It should now read "C:\Program Files\Microsoft Games\Train Simulator\UTILS\tsunpack.exe" "%1" press the okay button.
17. Press the close button for the edit file type box.
18. Press the close button for the Folder options box.
19. Now two click the .apk file. You should get a box that says "Unpackaged Activity to ..." Guess what ! It now works !