KB130892 - File Auditing Error in Windows NT 3.5

SYMPTOMS

Setting file auditing fails in Windows NT when you:

Run User Manager and turn on auditing.
Create a directory on a Windows NT file system (NTFS) partition.
Create four or more subdirectories underneath the original directory.
Select the third directory and deny access to everyone.
Select the original directory and choose Auditing from the Security menu.
Select Replace Auditing on Subdirectories, select Replace Auditing on Existing Files, and select any events to audit.
Choose the Add button and then add Administrator.
Choose OK to begin auditing the directories.
You choose Yes when the "Access denied. Do you wish to continue?" error message appears.

If you select any directory past the third directory to see if auditing has been turned on, you see that it has not.