Hello,
I'm having the same issue, but actually in the Alfresco Community Edition 3.4c for Windows, I get an apparently random "Could not update permissions" message quite often when I change and change and change the permissions of a folder and it's subfolders and their subfolders back and forth, I came to a point where i even deleted all the subfolders, only creating a new one would solve the problem…
1. what is the exact behavior of the folder permissions inheritance and what are their restrictions?
2. as MattyC asked, where can one see a log for this issue?
Is it a known bug? Please help! thanks in advance