When offering Apple File Protocol (AFP) service, Workgroup Manager allows you to set the default permission on new files and folders to "Inherit permissions from parent." This option does not work presently with Mac OS X Server 10.4 to 10.4.1. Specifically, AFP server is not setting the permissions on files created in subfolders of a shared folder when inherit permsissions is enabled.
Mac OS X Server 10.4.2 Update resolves this issue.
Note: If you enable or disable ACLs for a volume, you'll need to unmount and remount the volume for your selection to take effect. Alternatively, you could restart your server.