I'm inferring from the BOL that the security account that you specify for the job is being ignored:

"When xp_cmdshell is invoked by a user who is a member of the sysadmin fixed server role, xp_cmdshell will be executed under the security context in which the SQL Server service is running. When the user is not a member of the sysadmin group, xp_cmdshell will impersonate the SQL Server Agent proxy account, which is specified using xp_sqlagent_proxy_account. If the proxy account is not available, xp_cmdshell will fail. "

Since you server is using the Local account, it will not have access to network resources. You could try using xp_sqlagent_proxy_account and assigning a domain account as the proxy account and then executing the job under a SQL Server user that is not a member of the sysadmin role.

-Mike