The recycle module only recycles files (not directories). When the user deletes a file, a subdir tree is built out in their personal recycle bin with permissions of 0700. If they decide to _move_ it out of the recycle bin, the permissions are maintained. `chmod` is disallowed by default on SMB shares, the correct command is `setfacl`. Alternatively, you can take ownership of the directory as a Domain Admin and rewrite the ACL as needed using the windows ACL editor.