How to (re)enable the "New" context menu items for an administrator when right-clicking in a folder and selecting New > X?

OK, I've finally figured out what the issue is with Win7. Apparently, when you migrate a drive to a Win7 (or Vista) system, an administrator does not have full privileges as described in my question.

Here's what needs to be done:

  1. Change ownership of the drive to yourself (or the administrators group) and then apply the ownership changes to sub-containers and objects.
  2. Change permissions of the drive with the following permissions (delete all others if you want):
    • Administrators: Full Control
    • System: Full Control
    • Users: Read & Execute
    • Authenticated Users: Modify <---- This is the key group!

Even if you are an admin and own the drive, you will not be able to add a "new item" to an existing folder via the context menu until the group "Authenticated Users" has been added to the drive permissions.

The other alternative is to provide your user account Full Control to the drive, however, using the Authenticate Users group is likely to be a better practice in the long run.