I have Win XP Media Center Edition. When I try to set permissions for
a file/folder, the following happens more often than not:

I get properties on a folder and I see the green box indicating that
some subfolders or files are read-only, some aren't. I click once, it
clears it, click twice, get a checkmark. Apply/OK gives me the box
asking Apply changes to this folder only or to subfolders and files -
normal so far. Problem is that no matter which I pick, I hit OK and
nothing happens - you expect the harddrive to spin for a while while it
recurses through the directories, but the window just immediately
closes with no action. When I get properties on the folder again, the
green square is there and no permissions have changed. What gives? I
seem to be able to set permissions for files just fine. And this
happens even if a folder is empty. I tried turning off Simple File
Sharing and that didn't seem to help (didn't reboot, but I don't think
you have to).