A quick way to check the permissions is to use the "icacls" command that's built into Windows.
If you open a Command Prompt and run this:
icacls "C:\Documents and Settings" /LIt should display this:
C:\Documents and Settings Everyone:(DENY)(S,RD)
Everyone:(RX)
NT AUTHORITY\SYSTEM:(F)
BUILTIN\Administrators:(F)
For what it's worth, the other person found a tool which solved the problem for them. I can't vouch for the tool myself as I don't know exactly what it does, and it may be that your problem isn't the same as his (the symptoms are certainly different; he had problems with the Find tool rather than Synchronize), but here's the thread/post if you are interested in investigating it: System drive slow search-keeps looking in Application Data
I'd say it probably isn't worth messing around with, unless you run into other problems that seem related. The root cause may be something else, as I'm only really guessing, and messing around with things to fix a problem that seems to be solved by using the C:\Users folder instead is more likely to cause something else to go wrong than fix anything.