Hello Rajith,
We have experienced a similar problem with an <Unknown Contact> showing up as an owner in our 'Share With > Specific People ...' listing in Windows 7 Professional (64-bit). Furthermore, the <Unknown Contact> cannot be removed from the specific
people share listing because there is no dropdown for removal in the 'Permission Level' column of the listing.
We suspect our <Unknown Contact> entry is either due to a deleted user account when rebuilding our system after a drive failure or due to the fact these folders were restored from a backup under Windows Vista Ultimate (64-bit) that included some previously
shared folders. Regardless, the steps you provided did not remove, or allow us to remove, the <Unknown Contact> entry from the list.
We eventually resolved the problem by taking ownership of the whole drive while making sure that we had checked the option to***'Replace owner on subcontainers and objects'***. We had already taken ownership once, but neglected to check the option to replace ownership on subcontainers and, as a result, still had the problem.
We suspect the reason your solution did not work in our case, is that the option to *'Include inheritable permissions from this object's parent'*was marked by default. As such, it appears the <Unknown Contact> was repeatedly being inherited from the parent when
'Replacing all child object permissions'. Since we have corrected the problem in another way, we cannot test our suspicions. Nevertheless, suspect that unchecking the box to include the parent's inheritable permissions, may resolve the issue. If
you find this was the problem, you might like to update your solution to prevent this pitfall.
Thank you for allowing us to comment.