Question : permission rights are not being propagated from folder to files

I have a folder that is shared on a 2003 server.  A user calls me today and says that he is unable to access some excel files in the folder.  He gets an error message saying that he only has read only rights or that the file is encrypted.  
While logged on as administrator on the server, I noticed that many of the excel files are missing permissions for the everyone group.  After I add the everyone group and allow read access to the folder, he is able to access the file.  
There are approximately 500 files in the folder, so I'd like to make sure that all access rights on the files are the same as the folder.  When I click on the right click on the shared folder and goto properties->security->advanced and check allow inheritable permissions, it appears that nothing changes.  

Answer : permission rights are not being propagated from folder to files

Right-click the parent folder, go to properties, security, advanced, on the permissions tab check the box to "Replace permission entries on all child objects...". This will apply the folder permissions to all files in the folder.