System Folders Permissions Error

I have two computers both exhibiting the same problem. One is a Dell desktop, the other a HP laptop, both are running windows 7 Home Premium x64. I have a homegroup set up and also share a set of folders on the Dell.

My difficulty is that although logged on as an administrator, I cannot view any system folder, receiving the helpful error "Access is denied". There are two oddities that I have noticed as follows:-
1. All of the system folders( e.g. C:\Users\[Username]\Application Data) have little arrows against the folder, which I think means they have been redirected.
2. If I look at the permissions list, (by selecting properties and then the security tab), I can see that there is a deny permission for everyone with "list folder/read data" checked.

It would seem logical to think that it is this deny permission causing the problem, but why is it there? I could take ownership (SYSTEM currently has ownership) and change the permissions, but am reluctant to make any changes without understanding the root cause.

Any help or advice appreciated. I hope I have provided enough information, let me know if you need anything more.

Those aren't normal folders, but junction points. They're there to provide compatibility for pre-Vista programs, but are intentionally denied access to exploring. The one you're refering to points to C:\Users\[Username]\AppData\Roaming.

You may as well just ignore the junctions and use the real folders instead. For me, those are one of the first things I delete in a new install

Look here for more references about them:
Many junction points broken under %userprofile%
What are the original Windows 7 Junctions' and Symbolic Link's - Microsoft Community
NTFS junction point - Wikipedia, the free encyclopedia

That is very helpful, thank you