No, it isn't malware ridden. It is good you are hesitant in downloading anything from the internet, as a lot of stuff does have malware, whether it is spyware, viruses, trojans, or other nasties, but not everything does, and there are a lot of really good free applications. A couple of good download sites are:
http://www.downloads.com which is a part of the well known CNET website.
http://www.filehippo.com
There is also a good MSN group that began as a forum of experts who tested free and shareware applications. Here is a link to them:
http://groups.msn.com/FreewareandShareware/welcome.msnw
If you ever do get a hold of anything nasty, that group at that link can help you get if off too. Look at the links at the left of the page, and then go to programs, and other sections on what they have tested.
Just be very careful when installing any application because often other software is added. If you just click the quick installation it can be installed along with the rest of the actual application you wanted. Always click Custom or Advanced installation, or if only one installation option is offered be sure to read each page.
There is also a lot of really good free applications created within the Open Source initiative. This type of software is always great, and always free.
WinRAR isn't really free, it is Shareware. Like Winzip before it (but not now) WinRAR states there is a trial period, but after the "trial" is up you can still continue to use it, you are just continually asked to buy a Product Code. Winzip used to allow this too, but it has been the most popular compression/encryption utility for so long and people took advantage of this feature, that now when the trial is up you have to buy it or you cannot use it any longer. Hopefully, WinRAR will not do that, because some people just cannot afford it.
Windows does have built in compression and decompression utility. It just fails to work on some items, and I don't know why. For example, when downloading Skins for the Yahoo! Instant Messenger, Windows compression utility does not properly decompress these items, which is how I first began using Winzip.
Good luck and much fun with your Pimp My Sims, please have a nice day.