Share and NTFS Permissions Issue-Windows Server/Windows 7

Dear All,

I am facing a domain level issue, the problem description is:

 1. I try to create a folder and Named "Folder 1" and share it with every one with "Read" permissions only.
 2. I created another folder inside "Folder 1" named "Child".
 3. I set the security permission of  "Child" folder for "User 1" and "Domain Administrator" as Full.

The problem that i am facing is the users for which i have set permissions full are not able to create/modify and files in the "Folder 1". This is happening across the domain.
I have tried practicing the same on the File Server as well as on the desktop PCs but the same issue is coming up.

Please provide feedback for the resolution of the below problem.

Thank You

Regards
Abdul Wajid