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Big Update.
After spending last night on this, I've figured out what the problem was. There is no need to set permisssions different on folder then you would do on files. The problems I kept having were related to the serer shares I tried them on. They weren't correct in the first place.
I've since then tried setting perms on different workstations in my domain for instance "\\PC-1\c$\Temp" and there it worked perfectly, inheritance, order and everything. So the UDF got some overhaul and it nearing completion. Once I'm satisfied with it I'll submit it to the UDF's.
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