I can't seem to set/create permissions except for the top folder. Whenever I browse to a resource pool, cluster, VM or Datacenter the permissions menu option is greyed out for me.
What could be going on here? Any assistance is appreciated.
You will have to sort through your permissions list. Someplace you have changed rights for your own user, maybe it's a member of a group.
If you are admin, and your ID is ty1on, and you have a domain of vmware.com. If you added yourself to hosts/clusters as vmware/ty1on to explicitly have administrator rights (including permissions) that's why it's working at the top level. Then later maybe you added domain users, or some other group, and gave that group VM User rights. Most likely you are a member of that group. If you are, then you took away your rights for that object, or if you set this at a cluster level, all objects in that cluster will be replaced with that object permission and then it will cascade down.
Permissions have to be done carefully, it needs an overhaul that's for sure, and it gets confusing. My advice is don't use existing AD groups, make new ones just for ESX cluster, otherwise you could be members of other groups and have more problems.