We have a really strange problem.
My userid is a farm administrator and it a site collection admin on the site in question.
If I add a new group (to manage permissions), once I click the OK button on the create group page I get thrown to the Error: Access Denied page.
Here's the strange part, the group gets created.
If I try to add a user to that group, I get the access denied page but the user is not put in the group.
If I try to delete the group I get an error page that says Cannot complete this action. Please try again.
It appears to be only happening on this one site (and it's sub-sites).
There is nothing in any of the sharepoint logs or the event logs.
It has got to be a permission problem but I don't know what.
EDIT ------------------------------------ EDIT
After some more research I found this BLOG post. It states that a .NET 2.0 hotfix is the culprit of the problem and states that removing it will fix the problem.
I can't removed the hotfix because it is not installed.
Are we doomed to be stuck with this problem?
END EDIT