Take a look at the "available menu commands" (or words to that effect) pop up menu of the privilege set dialog. My guess is that you have select too restrictive an option in that menu for your privilege set.
Thanks very much Phil that worked! It was driving me insane :)
On a side note... is that the best way to separate users so they can not interfere with other users records?
As they still can see the records but it says * access denied* on the fields so the data does not show. Which I am fine with but maybe you know a better way to do it?
Any find performed by the user or a script will automatically omit "no access" records. So all you need do is add a script that performs a find for either the user's records or even all records, the "no access" records disappear. Once you have done that, it takes something like Show all records or show omitted only before the user can see them. If you have FileMaker Advanced, you can set up custom menus that either omit these menu options or that have menu options that perform your scripts instead of the built in operations for these two functions.