Last time I saw this SharePoint behavior.
- You create a team site in Microsoft Office SharePoint Server 2007 or in Windows SharePoint Services 3.0.
- The maximum upload size for a single file is set to 500 megabytes (MB) in SharePoint 3.0 Central Administration.
- You use the Stsadm.exe -o setproperty -pn max-template-document-size -pv 524288000 command to set the maximum template size to 500 MB.
- You try to save a site that contains lots of content as a template.
In this scenario, you receive an error message like:
"Failure decompressing data from a cabinet file."
Interesting behavior... lets look deeper why this can happen?
This error can occur even though the template file (*.stp) is smaller than the value that was specified in the Stsadm.exe command. For example, this error can occur if the .stp file is smaller than 500 MB.
The max supported size for a template is between 25 to 50 MB depending on the file compression.
More details you find in this KB 960969.