I am using the Productivity Suite v3 Data Converter tool to convert Urban Paths (from OS Master Map ITN layer (UK)) from gml.gz format to ESRI format. However, there appears to be a bug in this application as it is impossible to select the Urban Paths layer within OS Master Map ITN. Also, none of the windows displays properly. I have uninstalled and reinstalled Productivity Suite v3 but the tool still doesn’t work. I have used it in Productivity Suite v2.1 with no problems but now that I have ArcGIS v10.1 I am stuck with Productivity Suite v3 as v2.1 isn’t compatible with ArcGIS v10.1. InterPOSE doesn't work for my data and Interpose is unable to provide technical support as I am a PhD student and get the software free. Are there other ways to decompress and convert gml.gz data to ESRI format? I hope you can help. Many thanks.
You can easily decompress a .gz file with any decent file archiving software, such as 7-Zip for example.
Once you've decompressed the files you could then programmatically parse the GML data with your favorite programming language and an XML parsing library. Python and its built-in ElementTree parser are one such possibility. The lxml parser for Python can parse directly from the compressed .gz file with no need to explicitly decompress it beforehand. As you are parsing the GML data you would need to use another API such as ArcObjects or arcpy to create features and store them in an ESRI-compatible format.
If you have the Data Interoperability Extension for ArcGIS it includes an OS MasterMap GML application schema out of the box that should work. See Working with GML and related topics in the ArcGIS help.
As for your other issues, you should follow up with the application developers to report the bugs you are encountering.