Sql-server – Can SQL Server 2008 / 2012 have execute permission in a function for a user, but not for a table used in the function

It is true that you cannot grant EXEC permissions on a function that returns a table. This type of function is effectively more of a view than a function. You need to grant SELECT instead, e.g.:

GRANT SELECT ON dbo.Table_Valued_Function TO [testuser];

So your script would look more like this (sorry, but I absolutely loathe INFORMATION_SCHEMA and much prefer to use the catalog views, which also don't need functions like OBJECTPROPERTY):

DECLARE 
    @sql      NVARCHAR(MAX) = N'',
    @username VARCHAR(255)  = 'testuser';

SELECT @sql += CHAR(13) + CHAR(10) + N'GRANT ' + CASE 
    WHEN type_desc LIKE 'SQL_%TABLE_VALUED_FUNCTION'
      OR type_desc = 'VIEW'
    THEN ' SELECT ' ELSE ' EXEC ' END 
    + ' ON ' + QUOTENAME(SCHEMA_NAME([schema_id])) 
    + '.' + QUOTENAME(name) 
    + ' TO ' + @username + ';'
 FROM sys.all_objects
WHERE is_ms_shipped = 0 AND
( 
    type_desc LIKE '%PROCEDURE' 
    OR type_desc LIKE '%FUNCTION'
    OR type_desc = 'VIEW'
);

PRINT @sql;
-- EXEC sp_executesql @sql;

Now you can grant EXEC on a schema, and always create these procedures in that schema (actually one of the purposes of schemas!), which @jgardner04 already suggested, however in order for this solution to apply to table-valued functions as well, you'd also have to grant SELECT. Which is okay if you're not storing any data in tables in that schema (or at least that you want to hide from them), but it will apply to any tables and views as well, which might not be your intention.

Another idea (e.g. if you can't, or don't want to, use schemas) is to write a DDL Trigger that captures the CREATE_PROCEDURE, CREATE_FUNCTION and CREATE_VIEW events, and grants permissions to a user (or a set of users, if you want to store them in a table):

CREATE TRIGGER ApplyPermissionsToAllProceduressAndFunctions -- be more creative!
    ON DATABASE FOR CREATE_PROCEDURE, CREATE_FUNCTION, CREATE_VIEW
AS
BEGIN
    SET NOCOUNT ON;

    DECLARE
        @sql       NVARCHAR(MAX),
        @EventData XML = EVENTDATA();

    ;WITH x ( sch, obj ) 
    AS
    (
        SELECT
          @EventData.value('(/EVENT_INSTANCE/SchemaName)[1]',  'NVARCHAR(255)'), 
          @EventData.value('(/EVENT_INSTANCE/ObjectName)[1]',  'NVARCHAR(255)')
    )
    SELECT @sql = N'GRANT ' + CASE 
      WHEN o.type_desc LIKE 'SQL_%TABLE_VALUED_FUNCTION' 
        OR o.type_desc = 'VIEW'
      THEN ' SELECT ' 
      ELSE ' EXEC ' END 
        + ' ON ' + QUOTENAME(x.sch) 
        + '.' + QUOTENAME(x.obj) 
        + ' TO testuser;' -- hard-code this, use a variable, or store in a table
    FROM x
    INNER JOIN sys.objects AS o
    ON o.[object_id] = OBJECT_ID(QUOTENAME(x.sch) + '.' + QUOTENAME(x.obj));

    EXEC sp_executesql @sql;
END
GO

The drawback I find with DDL Triggers is that you can quickly forget that they're there. So a year down the road when you decide to stop granting these permissions to all new objects, it might take a while to troubleshoot why it's still happening. At my last job we logged all actions invoked by DDL triggers to a central "event log" of sorts, and that was our go-to place for tracking down any actions that happened on the server that nobody seems to remember (and it was a DDL trigger about half the time). So you may consider adding some additional logic that will help with that.

EDIT

Adding code for schema-based, and I'll mention again that this will grant permissions on any procedures, functions and tables created in the foo schema.

CREATE SCHEMA foo;
GRANT EXEC, SELECT ON SCHEMA::foo TO testuser;

Now if you create the following procedure, testuser will be able to execute:

CREATE PROCEDURE foo.proc1
AS 
BEGIN
    SET NOCOUNT ON;
    SELECT 1;
END
GO

The concept you want to understand is called "ownership chaining"

As long as the owner of the object and database remain the same, SQL Server will not re-evaluate the permissions of a user after the 1st object in the chain.

In your first example you denied USER1 access to TABLE1 but allowed access to VW_TABLE1. Since USER1 has access to VW_TABLE1 and the ownership chain has not been broken, they can see TABLE1 because permissions are not re-evaluated inside the VIEW.

In your second example I'm assuming the SEC schema must have a different owner which causes SQL Server to re-evaluate permissions when inside the VW_TABLE1 view.

In short, to fix this problem make sure all objects have the same owner