Every time I try to make my .cabs of programs, and no matter the original file size, the .cab comes out as 260 megabytes.

I have tried installing many different versions and trying with 7zip compression without the actual 7zip and with the actual 7zip program installed.

Is it because I have winrar installed?

No it is not.

You must have an extra file in your folder, maybe hidden.

Always start with an empty folder and keep the contents in it.