Thanks much for your replies. It helped me to focus on the PC end of things.
I worked a bit more on the PC and solved the problem by removing the everyone account on the c: drive that had the folders with varying permissions. This seemed to allow the varying permissions of the folders on...
We've got a peer to peer network with a mix of mac and pcs (10 total). We use a PC with XP Pro as our main depository of files. There we have simple file sharing disabled so that permissions can be set on a per folder or volume basis. This works fine throughout the network except on the Macs...