Server 2008 Folder Permission as READ ONLY

Let me see if I understand well: you have a shared folder with files and you want users to be able to create new files there but not to modify the existing files. Basically, it can be done but it requires specific folder and file permissions; and the file permissions will need to be manually changed every time when a new file is created – so, it is not practical.

What you need is a version control system. This can be done by Sharepoint (http://sharepoint.microsoft.com ) for example and there is a free version of it http://sharepoint.microsoft.com/en-us/product/Related-Technologies/Pages/SharePoint-Foundation.aspx with some restrictions in the functionality.  

Your second question: not allowing copy to the local disks is much more difficult to achieve and it requires several technologies as DRM, or Remote Services, or third-party security system.

The only way of achiveing what you require is to impliment Information Rights Management http://technet.microsoft.com/en-us/library/cc178985.aspx

Without this anyone with the ability to read a file can make a local copy

@ spaperov : So you mean to say i have to change the settings for individual file they create to READ ONLY and than again if they are creating a new file they have to change the permissions again ?

What I mean is that the request of your client is not practically feasible. Playing with the special permissions of the folder and the files you could realize your goal but you will be stuck with changing the permissions of every new file.  

There are another ways of achieving what you are looking for, and one of them is Sharepoint, as I mentioned in my first response. Sharepoint also could help you also with the second part – implementing IRM (I miss-spell it as DRM in my first post, but @KCTS provided you with a link to explore).

They don't have to understand such ADVANCED feature of sharepoint, they only know WORD and EXCEL and their accounting application. Even i was surprised when i heard because i never did it before and was just wondering if there is any solution or a script file where it could change the permission to READ ONLY on every new file created or saved.

The simple answer is that without IRM you simply cannot do what you want to do

But is there any other THIRD PARTY solution i can use because i have been strictly asked for this requirement where user can't delete or modify the existing file and do the SAVE AS ,even if there is no SAVE AS feature they want to prevent DELETION of files

Sharepoint or a similar product

and they are looking for something FREE as they have done a FAVOR to MICROSOFT by buying a SERVER 2008 license which was a BIG INVESTMENT already

Sharepoint Fondation is FREE http://sharepoint.microsoft.com/en-us/product/Related-Technologies/Pages/SharePoint-Foundation.aspx.

However, Sharepoint provides the framework and it still needs to be implemented. So, there will be job for you as consultatant.

I am really not getting whether to close this question or keep it active as i can't educate each and every user for SHAREPOINT, is there any other easiest way or any other third party applications which can accomplish this ?

Though it is not a proper solution but i manage to have a workaround for my problem by creating individual shared folder name