How to uncompress

Basically, I want to extract
1.  tar file from sysdump.tar.gz............(gzip -d sysdump.tar.gz)
2.  extract all the tgz and other files from sysdump.tar from step 1 keeping destination folders .....................(tar xvf sysdump.tar)
3.  from sysdump folder extract files from each of the 13 tgz files created from above step 2, again keeping dest folders. Here is where I get into trouble. I changed directory to sysdump and  tried
for i in *
> do
> gunzip *.tgz | tar xvf $i
> done

I got all sorts of messages with:

"xxx.tar file already exists; do you wish to overwrite (y or n)? tar: tape blocksize error
tar: directory checksum error"

basically repeating itself, and not stopping for each y or n.

The loop I created was from my old notes from Unix and it's not working very well in this Linux environment. Can I get an expert to help me out to recursively extract all the tgz  and gz zipped files keeping the original destination directories (and hang with me till it works?)

Thanks