Can't save network file or Word document opens as read only from network

I have set sharing with file changes allowed on the hard
disk of my XP PC. If I put a file in the root directory
I can modify it and save from a networked PC. If the
file is in a folder, despite setting the read only
attributes off for that folder or all the sub folders and
files, the file cannot be modified and saved from a
networked PC. I have set the Folder
Options/General/Tasks (as per the Knowledge Base article)
to "Use Windows classic folders to no avail.

Please advise.