Security in Windows XP

Hi,

I’m new to Windows XP, I have a wierd problem with Xp. I have a small network of 4,5 users and they do file sharing and printer sharing with each other. I set the sharing for (Everyone) which was fine on folder and sub folder level but when they try to access some files under subfolder the permissions are set differently. If I change the permissions to Everyone than they can access it but the issue if I set the permission on folder level I shouldn’t be doing this? what is the piece of puzzle that i’m missing?

Any suggestion will be greatly appreciated.

thanks