We have a small number of accts on a hosted exchange 2000 server
(hosted elsewhere).  On the client side we are using Outlook XP on our
Windows XP PCs and Outlook 2001 on our Macs.

I know that when I make a new sub-folder in our public folders I need
to set Permissions on it.

I can set permissions for each of the following:

- each person (individually)
- each group (i.e.. distribution list that is in the Global Address
List)
- “Default”

What is default?  How should I be setting it?
Which overrides which, setting permissions on an individual, setting
permissions on a group, setting permissions on “default”?
Does one override another one?
What happens when I add a new user.  DO I have to then expressly add
them to the permissions for each folder I have previously created?

Set the "default" permissions to the settings you want everyone to
have (presumably read-only, or no access at all).

Use "group" permissions to give a higher level of access to people who
need it (eg give "HR Department" write permission on "HR
Publications")

Unless your organization is very small, don't use permissions for
individual users unless you MUST.

Individual permissions normally override group permissions, which
override the default.  To be safe, always set the broadest settings to
the most restricted permissions, and add them as you go (rather than
giving everybody access, then trying to take it away).