Offline Folder Sync - Windows 7 Client Server 2003

I am having an issue with offline files created offline syncing back to the server. I have set up a network share to be available offline on a client computer. All files are available offline without issue. Here is the issue however. If I set the folder to work offline any file I create in the folder when it is offline just disappears when the folder comes back online, there are no conflicts or sync failures reported in sync center. If I create a new folder offline the folder does sync back to the server. Any changes made to an existing file are also replicated back to the server once the share is back online. So the issue is only with newly created files when the share is offline. I have not been able to replicate this error on any other file server in our environment, However I have recreated the issue with multiple shares with multiple Win 7 clients on this file server.

Steps taken so far.
- Checked and reset permission levels on the share.
- Recreated new shares from scratch for testing.
- Disabled and enabled offline files on the client computer and cleared the offline cache.
- Check various registry entry settings.
- Disabled cashing on the File server.
- Tested with XP the issue does not exist with XP.

The clients are running Windows 7 Enterprise 64 bit. The File server is Server 2003 Standard 32 bit with SP2.