Important When you configure an identity for an application pool by using a configurable account, you must add the account that you created to the IIS_WPG group in order for the worker processes serving the application pool to run.
Check: http://www.microsoft.com/resources/documentation/WindowsServ/2003/standard/proddocs/en-us/Default.asp?url=/resources/documentation/WindowsServ/2003/standard/proddocs/en-us/sec_acc_wpenable.asp