Let's say I have a folder C:\vault\folder 1\folder 2.
I want to set permissions so that a group doesn't have read access to folder 1, but does have read access to folder 2. Currently, I have "read file contents" and "show working versions of files" checked for folder 2, but no folder permissions checked for folder 1. With these settings, when I open the vault, I don't see any folders, presumably because nothing is checked for folder 1. Is there some setting I can set somewhere such that folder 1 is still visible so users can navigate within the folder structure to folder 2, but still not have access to files within folder 1? The folder 2 files can still be located through the search tool, but there are many people within my company who still prefer to browse through the folders instead.
I know that I can work around this by checking "read file contents" for folder 1 (assuming that I don't have any revision-controlled documents in folder 1 that might still be visible), but it's still quite a bit of work to have to do this for every single lower level folder.
As you've discovered in order for a folder to be visible to a user he must have "read file contents". If there are any files in that folder that are in a state where the user has rights to "read file contents" he will be be able to see those as well. We set up our folder structure such that if a user needed to navigate through it to a subfolder, no files are stored there.