Run Batch File In A Job Step.

MS SQL Server 2005

i get the following error when trying to run this job as user1:
'Unable to start execution of step 1 (reason: Error authenticating proxy serv1user1, system error: Logon failure: unknown user name or bad password.). The step failed.'

and the following error when trying to run the same job as 'sql agent service account':
'Executed as user: serv1user1. The process could not be created for step 1 of job 0x3653ACCFFA46DD47B3703C87DDFD0717 (reason: 2). The step failed.'

>job:
job name: job1
server: (local)
connection: net1user1
owner: serv1user1
step type: operating system (cmdexec)
run as: user1
command:@echo off
copy C: est.txt C:folder
ECHO Job completed
PAUSE

>the sql server agent service is running under 'serv1user1' and works fine for other jobs running ssis packages.

>i have created the following credentials under security/credentials:
credential name: serv1user1
identity: serv1user1
password: same as sql server agent service


>i have created a proxy under the sql server agent/operating system (cmdexec):
proxy name: user1
credential name: serv1user1
active subsystem: operating system (cmdexec)
principals (sql login): serv1user1

thank you