windows 7 - folder re-direction/offline files issue

There is a workstation client who is running on Windows 7 and having some issues when they are trying to open any documents from the My Documents folder. We are on the Windows server 2003 domain controller and it has all the users My Documents redirected via the GPO to a DFS based file share. The NTFS & Share permissions are correct and verfied properly. The clients who are on Windows XP have no issues but the Windows 7 client is unable to open any documents like ms word, excel, etc and gets an error message "Access Denied". What could be wrong here, can anyone suggest?

I think that you are unable to save a new file into a folder in the DFS share if I am not mistaken. Can you tell me whether this Windows 7 computer list the name of the domain hosting the DFS as a Local Intranet site in Internet options?

Have you managed to solve your problem?
I’m experiencing the same kind of situation a I’m not able to find the solution until now.
Thank You

If you are utilizing Offline Files for its traditional point of caching user documents stored on a central file server for offline access, you don't require turning on transparent caching. Transparent caching is exclusively for temporary caching of SMB data that is not broached into the cache. My advice is to turn this on while the link latency is 60ms or bigger.