From Jonsdocswiki

Windows 7 (and Windows Vista) greatly improved how file synchronisation occurs but they are not without fault.

Access is denied error

Environment

This problem was noticed with:

• Windows Server 2003 file server
• Windows 7 Professional client

Symptoms

When synchronising, the Sync Center reports numerous errors which on closer inspection appear as access is denied. If the user tries to access their home area they are also denied access, this applies to being both on and off the network.

Disabling offline files will allow access to the files again - clearly there is a problem with offline files.

Solution

After much Googling it was found there was a problem with Windows 7 when encrypting the offline files cache in this environment.

First, confirm the offline files cache is encrypted:

Encryption tab of Windows 7's offline files with the Sync Center behind.

1. Open Sync centre
2. Click Manage offline files
3. Choose the encryption tab.

You may be told that:

• Your files are not encrypted (in which case the rest of this solution doesn't apply)
• Encryption is managed by your system's administrator (or similar, in which case this may apply).
• Your files are encrypted

If your offline files are encrypted then it is possible that is your problem, not that I can explain why. At this stage you will need to disable encryption to test.

• If the settings are not managed by your administrator, simply click the decrypt button
• If your settings are being defined by an administrator or third party you will need to ask them to make the changes (possibly through group policy).