Imagine you have an Intranet folder. And you have shared folders for all users, but other are private. All them stored in Dropbox.
Imagine this structure:
And now you mark "user1" as private and only allow that user to browse that folder. And the same form "user2". And so on.
And now the users create subfolders inside their dropbox. That's a filesystem.
And (logged in with user1) while you cannot directly browse to others users folders, you can search their subfolders (created by the search engine shortcode generator). That has no sense at all.
You should allow us to mark "user1" folder as private, and a check to "Propagate permissions to subfolders" or similar. Because the user will dinamically create and remove folders and subfolders.
In this scenario, the search engine is completely unusable.