We have seen this issue only occur on Windows 10 systems applying Group Policy.
Cause: In our environment a specific Group policy was filtered to Windows 10 only. Within this policy the following security setting was set to modify C: drive file permissions:
Computer> Policies> Windows Settings>File System

The policy specifically was allowing Administrators Full Control and Users Read and Execute permissions to "This Folder" only. This had the affect of preventing sub-folders from inheriting Administrator / Users permissions.
If this policy does not exist or is set to "This folder, Sub-folders, and files" then the additional Folders are not created.
I believe this issue is a bug in the way Windows attempt to create the folder and inherit permissions; by default the folder will inherit from above but with this policy in place it fails to inherit and tries 4 times before timing out. Each attempt results in a restricted folder.
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