Hi Mary & John,
I wonder if Moodle's file system is appropriate for sharing code at all. The whole process of zipping, uploading, downloading, unzipping, and viewing seems to be unnecessarily cumbersome.
Something like Github.com would appear to be more appropriate for code sharing and review, however free Github.com accounts are public and you need to pay for private ones. They also offer education accounts: https://education.github.com/
Git itself is free and open source (developed by Linus Torvalds himself!) so there are likely to be free and open source implementations of a Git server that are appropriate for your learners' needs: http://git-scm.com/
The nice thing about using a software repository and versioning system like Git is that you and your learners can upload (push) new work and edits directly to the Git server from their integrated development environment (IDE) and anyone with access can download (pull) them directly to their IDEs to view and test them with the minimum of fuss and effort. You can also include comments and feedback with code updates.
It's also ideal if you want to get into server-side scripting and programming since learners can easily set up a localhost server on their computers and write apps in PHP, Python, Ruby, Node.js, etc. Or write or edit themes for widely used CMS' like Wordpress, Joomla, and Drupal.
I hope this helps!