Never write your code this way

decompress.py

#!/usr/bin/python
# -*- coding: iso-8859-1 -*-

import sys
if not len(sys.argv)==3:
	print 'Usage: decompress.py <filein> <fileout>'
	sys.exit()
def getbyte(file):
	char=file.read(1)
	if char=='':
		return -1
	return ord(char[0])
fin=open(sys.argv[1],'rb')
fout=open(sys.argv[2],'wb')
c=getbyte(fin)
while not c==-1:
	if c==255:
		num=getbyte(fin)
		val=getbyte(fin)
		while num>0:
			fout.write(chr(val))
			num-=1
	else:
		fout.write(chr(c))
	c=getbyte(fin)
fin.close()
fout.close()