Process ran as different user - web service call

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I have a legacy piece of software, that used to run from [email protected] account on machine X. This piece of software, amongst other things, makes a webservice call, using MSXML. The call is authenticated by passing [email protected] credentials with NTLM. All webservice communications work seamlessly.

I now have to run this piece of software under [email protected] account on the same machine X. To preserve current setup and to avoid configuring additional delegation, I wrote a wrapper, which uses Process.Start() to run the legacy software as [email protected]. Now, when the webservice call is made, the credential box pops up, despite fact the legacy soft is running as [email protected]. Even if I provide username/password combination, this gets rejected by the webservice.

Unless I log in as [email protected], then switch accounts to [email protected], leaving the previous session in the background - in which case all works fine.

Can anyone shed a light on this? Does invoking a process require user profile to be active in some shape or form?

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Rejoining the machine to the domain has resolved.