By default if you change the client permissions settings on a public folder in Microsoft exchange 2003, the permissions do not propagate through the subfolders.
In order to manually force the propagation in exchange system manager Drill down to the public folder, right click and select All Tasks and Manage Settings…
This will open the manage public folders setting Wizard. First of all you may want to modify client permissions to enable domain users or other groups to have access to the particular exchange public folder.
Once you have set a folder permissions you require run the wizard and select overwrite settings
Select Folder rights for the option to propogate the settings
Click next and finish and you will see the window going through the subfolders and setting the permissions.