Allowing user group rights to view restricted directory

Ok....
I am running an intranet site on a win2k server. There is a restricted folder so that a group called admin_web could access it. They have full rights and this group is a local one. Now I have this other group that needs rights to view this folder and its contents. If I use active directory and give them rights and also give them rights on the manage selection for that folder it does not work. But... If I add them to the admin_web group it works. I then created another group with the same exact rights to the folder that Admin_web has and no joy. I have read all to many other threads that had similar trouble and tried to implement the recommended changes and nothing good has come out. Is there anyone out there who has hit this brick wall before?

btw the error the user gets is Error: Access is Denied.

You sometimes need to restart IIS to get it to recognize changed permissions on files & folders.

Yes I have restarted IIS and still gives me the error.

Assuming the application is prompting users to authenticate and they are, then there is something incorrect in your groups or the way you've assigned permissions to the folders/files. IIS will "pass along" the user supplied authentication credentials after the user has logged in.