Have you tried drag & drop???????????

Yes, i tried drag and drop, but once the folder is in sharepoint, it
inherits the parent's folder permissions, even though I unchecked "reset all
subfolders to use these securtiy settings".

I didn't think about that................

Typically you would leave the files on the original file-system when you
wish to reserve the access permissions.
If you have the resources available to redo your work, move the files into
SharePoint.

There's no way to preserve the access permissions... different security
mechanism.

t seems like I've got a lot of work ahead of me.