>>You may have to set up impersonation for you app.
>If that is indeed the only way to make this work, are you thinking that I should impersonate the ASPNET account?
I'm not sure if there is another way, I haven't worked with Win 2K3 yet... however, my understanding is the the Network Service account is not a user account, it is more of a system account. You can run a service under the 'system' account, but you can't grant it rights to SQL server.
If you do find a better way, please post your findings, I am interested in the 'best' answer.
FYI: The .Net app my group ships now uses impersonation and we haven't had any troubles... granted, this is on an intranet install and on Win 2K.
Here's a link to a web cast I am about to watch, maybe it offers some info on this topic:
http://ems.interwise.com/msfm/live/ViewRecording.asp?id=2225BOb