SharePoint has a known issue when you're working with the Security of SharePoint. When you are working with the permission in Sharepoint and want to go back and forth between inherited and custom security, MOSS 2007 gets mad. Breaks the entire portal. So if this happens look for this hotfix:
http://support.microsoft.com/kb/937038.
My colleague, Becky Isserman, found this hotfix for us. Her Blog is http://www.sharepointblogs.com/mosslover. And Safe Journeys in the world of SharePoint!