Lock overlay on a folder icon

There may be other reasons for the lock overlay on a folder icon, but what I've found is the lock overlay means the file/folder permissions have been changed and is restricted in some way from what would be inherited, usually that not every one has access to read the folder and it's contents.
For example, if you remove the HomeUser group from having Read & Execute permission to a folder under My Documents, the lock overlay will appear. (I do have my Documents shared in a HomeGroup)
Removing the Users and Authenticated user groups from a folder created in the root of a drive will also add the lock overlay to the folder icon.
You can remove the lock overlay in this case by resetting the permissions to be inherited, and removing all permissions that are not inherited.
Right click the folder, click Properties
Click the Security tab
Click Advanced
Click Change Permissions
Check Both boxes to Include inheritable permissions, and to Replace all child object permissions
Click Apply then click Yes
Wait for the list to refresh
Remove all permissions that say <not inherited>

That should remove the Lock overlay.
You may need to Uncheck Use Sharing Wizard in Control Panel | Folder Options | View tab to see the Security tab, and may have to boot to Safe Mode as well if running Home Basic or Premium.

If you are not sure about what the permissions do, may be best to leave them alone. Definitely, do not add a Deny permission of any kind unless you are certain of how it will work. You can lock yourself out of the system by adding a Deny permission in the wrong place, especially if you deny a group rather than a user.


From: http://forums.techguy.org/windows-7/882153-solved-folder-lock-icon.html