Peter Bromberg's UnBlog

  NETWORK SERVICE and LocalSystem authenticate themselves always as the corresponding account locally (builtin\network service and builtin\system) but both will authenticate as the machine account remotely. This can cause login failures. If you see a failure like  Login failed for user 'DOMAIN\MACHINENAME$'  it means that a process running as NETWORK SERVICE or as LocalSystem has accessed a remote resource, has authenticated itself as the machine account, and was denied authorization. A typical example would be an ASP application running in an app pool set to use NETWORK SERVICE credential and connecting to a remote SQL Server: the app pool will authenticate as the  machine  running the app pool and is this machine account that needs to be granted access. When access is denied to a machine account, then access must be granted to the machine account. If the server refuses to login 'DOMAIN\MACHINE$', then you must grant login rights to 'DOMAIN\MACHINE$' not to NET...