I noticed i get the little yellow caution "Done, but with errors on page." message in IE (FireFox doesn't have this but it doesn't show the permission either).  The message is:

Line: 2673

Char: 447

Error: Object doesn't support this property or method

Code: 0

URL: http://localhost/Home/tabid/201/ctl/Tab/action/edit/Default.aspx

If I go to view source on the page and line 2673 it is the spot where it talks about permissions.  Here's a snipit as that line is quite long:

<script type="text/javascript">dnn.setVar('dnn_ctr_ManageTabs_dgPermissions_ctl03_ctl02_ctl00_p', '{state:\'True\',imgpath:\'/images/\',enabled:\'0\',states:\'[{"Key":"True","Text":"","ToolTip":"Permission Granted","ImageUrl":"grant.gif","DisabledImageUrl":"lock.gif"},{"Key":"False","Text":"","ToolTip":"Permission Denied","ImageUrl":"deny.gif","DisabledImageUrl":"lock.gif"},{"Key":"Null","Text":"","ToolTip":"Not Specified","ImageUrl":"unchecked.gif","DisabledImageUrl":"lock.gif"}]\'}');dnn.controls.initMultiStateBox($get('dnn_ctr_ManageTabs_dgPermissions_ctl03_ctl02_ctl00'));</script>

Have you tried another browser to see if it's just a local javascript issue?

Sorry I'm just suggesting random things now :) Here's the next one to think about.

Right click on the DNN UPDATE ZIP file that you downloaded, choose properties. Do you see a message at the bottom of the properties windows about "blocked" or something to that effect? 

I've noticed that Recently windows has started blocking certain ZIP files from fully extracting, wondering if perhaps not all of the package extracted for you?