403 showing wherever an iframe is located

error log shows:

[ACL] Access to context [/path/to/folder/] is denied!

In that folder, we serve html files via ajax and have an htaccess file there with the following contents:

RewriteEngine off
<Files "*">
Satisfy Any

IN the parent folder, there is an .htaccess file with
Deny from all
in it.... which we need.
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so, it seems it has to do with that htacess. This works fine under apache however.

To fix it, i just moved the subfolder to a new location, but this is hardly ideal

What's the real fix here please?