go to the "effective permissions" tab in the folder properties. Enter the username (keith) and see what the permissions show he has access to.
If they don't match up with those you think it should have, then it is inheriting permissions from somewhere. Check the directory one level up is not granting stuff.
I have a feeling that the "Inherit from parent the permission entries that apply to child objects. Include these with entries explicitly defined here" checkbox on the folder will solve your problem if you un-check it.
XP/2K/NT permissions are a pretty complicated thing to try and diagnose when you can't physically muck about with the settings, so i recommend you read an overview of the permissions system (inheritance, effective permissions in particular). Help centre probably has something in it.