Windows – relocate “Users” folder to another volume drive on windows server 2016

Newly created files typically inherit permission from the parent folder. You need to look at, and fix the permissions on the parent. Unfortunately your screenshot is show us the sharing tab, which is probably fine.

The parent folder should grant modify access to a group that all users are a member of that will apply to the newly created files.

Yes. This can be done using native Windows commands like diskpart, bootsect and copy (xcopy).

Here are the guides that cover the topic exactly: https://www.starwindsoftware.com/blog/how-to-create-bootable-windows-server-2016-usb-thumb-drive-for-installing-os

http://itproguru.com/expert/2016/05/create-bootable-windows-server-2016-usb-thumb-drive-for-installing-os/

Hope this helps.