Database and file backups have different settings. For database backups, if you are using SQL Agent, you need to set differential by going to "Microsoft SQL" tab in the backup job properties and not "general" tab. The settings under general tab would apply to Files and folder level backup. I assume you have changed to archive bit backup now. Now, the question is have you made sure that it is indeed backup based on archive bit for both full and differential jobs? If by any chance, one is at modified time and the other at archive bit, your strategy would really not work. If using archive bit, can you do a test with ntbackup or something that we can compare with. You may want to keep SQL backups aside, as for them, i am not sure if you have set it to differential in "Microsoft SQL" tab.
Thanks