Suspected submit.cfg issue

System

I am running TeamSite 6.5 SP3 on Windows 2003 server and I am having an issue with a user trying to edit a file in their workarea.

TeamSite\branch\workarea\corp\htdocs\application\file.xml

We have a restriction in the submit.cfg that looks like this

/default/main/branch/.{
/htdocs/application/
{setaccess {domain:group1:all, domain:group2:all} owner=TS}

/htdocs/
{setaccess {domain:group1:all}owner=TS}

I can change the permissions on the directory on iwserver, once the server re-reads the submit.cfg with the edits above. Once the user submits the directory security changes to what is displayed at the /htdocs/ level.

I have been able to run the iwtestcfg /default/main/branch/workarea/corp/htdocs/application/file.xml

It finds the correct match for /htdocs/application/ but whenever a submit takes place it appears the /htdocs/ security gets reapplied.

Any ideas.....