Rebuild files fails after verifying folder structure

When running Site Content Manager to build the file system of a site the process terminates after that the file system has been built or verified but before any files has been build. Before version 4 build 1010 this was done without warning and in version 1010 an Access denied message is displayed.

During the file system rebuild process Content Studio checks the file system and applies the correct permissions to each folder. Right after Content Studio checks the folders whose names starts with ~ (tilde) (starting with version 4 build 1010 the folder ~Temp is not affected). These are special folders that contains common objects such as java-scripts and dialogs and must be accessible to any user. Content Studio checks that these folder does not inherit any permissions from their parent and that 2 vital permission entries are present. These two are ADMINISTRATORS - Full control and EVERYONE - Read Execute. If not found Content Studio tries to fix this and if the Content Studio Runtime account does not have the necessary permissions the process fails. In older versions of Site Content Manager no error message was displayed but starting from version 4.0 build 1010 this error has been fixed.