There have been more than enough reports from SL users to justify a blog post informing everyone of this new server bug and how to work around it. It was discovered by one of our support people on an RC region and reported to LL on the 9th of July, it was acknowledged by LL on July 12th but by then it was too late to stop the roll out onto the main grid.
You can no longer change permissions for your friends while on a viewer which doesn't utilize Web Profiles and whether you are, or are not on a viewer that uses web profiles the friend you are changing permissions for needs to relog after you have set the permissions through their web profile. I am assured by LL that they intend to resolve this issue as soon as possible but at this time they cannot provide a date when the fix will be rolled out. You can read the Jira report about the bug here https://jira.secondlife.com/browse/SVC-7104
The Work Around
In the meantime, there is a work around. First, you must open the "Web" profile of the person you wish to change permissions for. This includes Map rights, Modify my objects permissions and Online status permissions.
1. Open the web profile of the person you wish to change permissions for using the following URL in your web browser. http://my.secondlife.com/firstname.lastname. Replace the first name and last name with the persons first and last name. If they do not have a visible last name do http://my.secondlife.com/firstname instead.
2. Once you have their profile open, click on the "ACTIONS" button near the top and to the right, then choose "Permissions" from the sub menu.
3. Give or remove the permissions you wish to change and click "Save".
4. Now the person you've changed the permission for will need to relog in order for them to actually get the permission change.
If you just want to remove all permissions for a friend to default, you can just remove them from your friend list and re add them.
I hope this helps folks at least understand the bug and how to work around it. Lets hope LL can get the fix out soon!
The Phoenix Viewer Project