Ok I think I got a handle on this problem. The issue arises out of a series of events coming together.
1) The files in question were probably created under XP when the default account was Administrator.
2) The files in question are probably on something like an external hard drive or any other media that was not available when Win 7 was being installed.
3) The user name used when creating the admin account for Win 7 is likely not Administrator. As the files are not available during the install of Win 7 the files are presented at a later date to the new OS with their old XP permissions intact under the user name Administrator.
4) When Win 7 sees these new files it reacts to the fact that the user name it is using does not match the user name inherent in the files and folders in question. Win 7 then assigns the files to an unknown user status and demands the user change the permissions to reflect the User account being used.
Here is where it gets tricky. One would expect that by assigning permissions to the Parent Folder that all Folders under it will follow suit. The fact that this does not occur would appear to be a bug. However it is not. People forget just how Windows handles permissions when it comes to Folders AND Files together. Here is what I have found. If my parent directory has any files in it as well as folders it will not change the permissions on the files and the folders at the same time. This holds true for any sub directories in the tree that contain files and folders. So if you have Folder One then Folder Two plus files then Folder Three etc then permissions will not be reflected all the way down the tree. So when you change permissions at the Parent level and then try and copy the whole lot over Win 7 will hit a file or a Folder under a Parent Folder with those files that still have the old permissions. Win 7 will then halt the process seeking the permissions to be changed. If ALL the files in question are ALL in one Parent or a Sub Directory then the permissions should change using the advanced option under the security tab. However this process seems to fail if any directories in the tree have more sub folders under them and have files in them at the same time. To free the files and move them from the Tree it appears that the Files must have their permissions altered in their own right. However this might be avoided if all directories that share the folder with those files are removed from the tree. However if you have multiple folders with multiple files throughout your tree you have your work cut out for you.
As this is actually normal behaviour for Windows and how it deals with file permissions then it is not a "bug" so there is nothing for Microsoft to fix. I hope this helps. In the days of XP just about everyone used the user name Administrator so this is why this problem has not really surfaced before.
