I can understand your confusion and frustration. Many of us believe so called VCD is a hidden partition on My Passport drive. This is not entirely true. VCD is software emulation and created from an ISO file reside in My Passport root folder(s).
Once you connect your drive into the PC, this ISO file auto mount to your PC as a virtual drive or VCD. This ISO image is read only and you cannot write anything in to it. This is only used for drive lock/unlock requirements. VCD will properly function if you have SES driver properly installed in your device manager.
Finally, if you can see VCD in your system, why you need to copy original Smartware content in to the drive itself? If VCD is not functioning properly, you have to hide the VCD using WD VCD hide utility and format the drive. Then copy the zip drive contents into the empty drive.
You can download the new version of Smartware backup software from WD support site and you don’t need to keep it the My Passport.
AGAIN, the “zip drive contents” are only to be copied to root of the drive. Not to the VCD. This is only applicable for fully formatted drives.