Problems with file permissions on Windows Server 2008 r2

Question

I have a Windows Server 2008-r2 machine with a share. I have one admin user and 3 standard users accessing this share.
I have an application being run by the admin user (but not run as Administrator) that makes new directories and copies files into those directories.
The share gives everyone read access and Administrators full control. In addition, security for the share gives Read & execute permission to the 3 standard users. When adding the permissions for the 3 standard users, I did a "Replace all child object permissions with inheritable permissions from this object". Fact is I tried without and then tried with.

Ok. Here's my problem:
At the time I give permissions, all 4 users have access to all folders and files. However, when the app makes a new folder and then copies files into it, the 3 standard users have proper permissions for the folder but no permissions on the files (Effective permissions on the files show as none). If I redo permissions, then the files I had problems with work, but again, new files do not. I did change 1 of the 3 users into an Admin and confirmed that all file access works as expected.

So what am I missing? I assume it has something to do with copying the files, as creating the folders give them the proper permissions.

Update: based on @Zordache's comments, I have done the following:

• Added a group, added 3 users to that group, removed individual permissions.
• Gave that group similar permissions on the directories the files were being moved from.

So I have now confirmed that permissions are correct on a file moved from an input directory. I am just waiting for a new file to come into an input directory to confirm that this solves the problem.

Answer 1

Rule #1 of working with permissions is to never setup permissions per-user except on a home-directory.

You should almost certainly create a group, add your three users to that group, and then setup permissions based on that group.

BTW, is the application actually creating files in the destination directory, or is it moving them from some other location? When files get moved, within the same volume, then permissions are not updated to what you might expect on the destination, and instead the permissions from the source location are kept.

KB310316: How permissions are handled when you copy and move files and folders

By default, an object inherits permissions from its parent object, either at the time of creation or when it is copied or moved to its parent folder. The only exception to this rule occurs when you move an object to a different folder on the same volume. In this case, the original permissions are retained.