Is it a 32-bit version of QB64, or a 64-bit version? They use 2 different library files, so make certain that both are in the current directory so they can be found.
You might also try to change that line to :
DECLARE LIBRARY "./zlib1"
and:
DECLARE DYNAMIC LIBRARY "./zlib"
If all else fails, you can always hard code the path to the library, to make certain it'll be found.
DECLARE DYNAMIC LIBRARY "C:\Your Dir\Sub Dir\zlib"