OS X server 10.4.10 file permissions issues

We have a client that is having a really strange permissions issue. They are running OS X server 10.4.10 on an Xserve G4 SL and an Xserve RAID v1.3. Whenever a new folder is created on the share by a user, other users in the same group have read only permissions, even though in WGM the group is set to have read/write. WGM lists the permissions correctly, but the OS(?) isn't respecting them. Additionally, we are having problems propogating *new* permissions set on one directory to it's sub directories. As in we cannot. The option to propogate in WGM is greyed out, and indeed *new* permissions and ACLs are not inherited by sub directories. That's another problem to deal with, but POSIX permissions are still set correctly across all directories and their subdirectories, I have verified this by going into the sub directories manually and A) looking at the permissions settings and B) examining the effective permissions of the users - I did not try with all directories or users as there are a LOT. Some background: Apparently these users were migrated from an older NetInfo directory. Passenger was not used, but this was before my time. I will try to get more details on this. I did notice that the group (the one having permissions problems) had each user listed twice (same user ID and all). I deleted this group and recreated it, now it is represented in WGM properly. *update* Apparently the group is showing all users listed twice again... It's been tossed around to chmod -R 775 those directories that are having problems. But from my understanding that will only change the permissions on the existing shares, not any new ones that are created. This weekend we are going to create a new directory, move data from one of the old directories to this new directory, and share out this new directory. Only on one of the shares though as this could be time consuming and we aren't even sure if this will work. We're pretty lost here, and the client is not happy...