Running Windows Small Business Server 2011

I have a file structure with a lot of sub folders (sometimes 5-6 levels deep). I have created access groups to grant access to my users, and also deny groups to deny access to others.

X Access & X Deny. These allow or deny access to a mapped network drive X:

On the server I put in the groups with Full Control Allow for X Access and Full Control Deny for X Deny, I also tick the box "Apple these permissions to objects and/or containers within this container only" and have ensured that "Apply to:" is "This folder, subfolders and files".

But for some reason the permissions will only apply to the next level of folders & files.

ex. structure:

X:

Folder 1

Folder 1a

Folder 2

Folder 2a

If I apply the permissions to X: it'll only go to Folder 1 & 2, not 1a and 2a, I then need to manually apply the permissions to these too.

Is this working as intended or am I doing something wrong?