Thank you for your forum post and sorry that you have encountered a problem.
It looks like that the compression components within SQL Backup have failed to decompress the backup file.
If you have a tight deadline to meet and need to get this restored, there is a stand-alone version of the conversion tools available HERE.
Does this occur for every backup file you attempt to restore on this server?
Was the backup file copied from the Production Server to the Dev environment?
You can use the SQL Backup Testing Utilities which can be downloaded using this LINK.
From tools menu there is a file integrity checker and a MD5 hash generator. You ensure that the backup file is OK and if the backup file was copied create a hash code of the original and copied file, if the hashes do not match I suspect the copied file has corrupted.