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If an enduser is granted Full Control of a Folder within a document library, will they be able to manage permissions?

The reason for this question is that several end-users are getting an error "this item is no longer available. It may have been deleted by another user. Click 'OK' to refresh the page." when using the drop-down arrow of a Folder.

Also the end-user does not have access at the Library Level only the Folder Level (full control). They create additional folders and grant permissions individually.

I know this is a worse practice but i'm trying to determine if this is the issue and get them back on the road to doing things the right way.

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Yes. Users with full control have access to modify permissions within the area where they have full control. There are lots of permission options and it shouldn't be difficult to create the granularity that you need. Perhaps you should give users read/write/add/remove/edit permissions without giving them full control.

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