Mohan,
You mentioned the system is on 3.5 security settings so first thing is that please ignore all the RSECADMIN/ RSECPROT suggestions, those are applicable only for 7.x settings.
In 3.5, you will be using RSSM & RSSMTRACE, but I guess you are already aware of that.
Now from your second screen shot, it seems like you are dealing with Navigational Attribute, and that could be the culprit here as 3.5 security can not handle navigational attribute, that is possible only under 7.x security.
Also as mentioned earlier, if the object is not marked authorization relevant, then security does not play any part in restricting it. If it is a key figure then make sure 1KYFNM is maintained properly in the z-object.
Regards,
Shivraj Singh