No the persmissions were fine (except for the fact that I could no longer change them or add acls via the xsan admin, though I was able to change the posix permissions in the command line). It was using Open Directory. In fact everyone was set to read/write. I finally had to move all of the subfolders to a new folder and delete the old folder.
Thats odd. Here is another trick. Try chmod -R -N /Volumes/Xsan_Volume/Permissions_Directory
-R mean it will recurrsive change
-N will remove any and all ACL's
The only thing that might have happened was there was a extended attribute that was created.