Managing folder access with groups in SBS 2003

I think I'm missing a fundamental concept on Windows 2003 SBS security.  My goal is to manage folder access with security groups.  I have the following settings...

A shared folder with the these permissions:
Users (Acme\Users) have Change and Read
Domain Admins (Acme\Domain Admins) have Full

There is a sub folder to the shared folder that has this security:
Users (Acme\Users) have Traverse Folder, List Folder, Write Attributes
Domain Admins (Acme\Domain Admins) have Full Control

The problem is that members of the Domain Admins security group can not create sub folders in the sub folder.  If I look at the effective security for a person that is in the Domain Admins group, i.e. Joe Smith(jsmith@acme.local), it shows that everything is checked.  If I explicitly list Joe Smith with Full Control then he can create folders.  It's like the security group is not being recognized although the effective access looks correct when I specify Joe.

If I look at Active Directory in Server Manager Joe is listed under acme.local\MyBusiness\Users\SBSUsers.  If I look at Joe's properties it shows he is a member of Domain Admins in the Active Directory Folder, acme.local\users

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