Macintosh Manager or Multiple Users used with any version of Mac OS 9.x creates a Users folder on each available volume. An affected volume may be a piece of writable removable media (such as an Iomega Zip disk, but not a CD-ROM), a hard disk or partition, or a remote volume that appears on the desktop. This Users folder will have the same permissions as the Users folder located in the Macintosh Manager shared folder located on the startup disk of the Macintosh Manager server.
For related information, please see:
Article 31228: "
Mac OS: Limited Access to Folder Named 'Users'"
This is a normal behavior for Mac OS 9.x and for Macintosh Manager.