I have the following section declared in the webconfig file to allow impersonation , I have shared the folder to public access within the network on the other machine
This is what I did to solve this issue. I hope it will help someone.
I'm running Windows 8.1 and IIS 7 and I had the same message as the author.
These are the steps I followed to solve the issue :
1) If not already set in Windows, set the password for the account to make it match with the information there is in the web.config file
Go to PC settings -> Accounts -> Sign In option and set your password
2) Add Windows authentication in IIS Windows feature
a) Right click on the Windows logo in the bottom left corner
b) Click 'Control panel'
c) Click 'Programs'
d) Click 'Turn Windows features on or off'
e) Under 'Internet Information Services' -> 'World Wide Web Services' -> 'Security', check 'Windows Authentication'
3) Restart the computer
4) In IIS Manager, in the 'IIS' group, click on 'Authentication'
5) Make sure the status of 'ASP.Net Impersonation' and 'Windows Authentication' are Enabled
6) Restart the computer and re-run the solution
Also make sure that your web.config impersonate line contains the Domain like this :