User Credentials Delegation From IIS On WinXP To SQL Server On Win2003SRV Fails

Problem:

I am trying to create an asp.net website with integrated windows authentication
to access SQL databases. IIS resides on WinXP and SQL Server
on Win2000 SRV. Both are in the same NT Domain. IIS and SQL Server cannot
reside on the same machine and a stand alone web server is
ideal as the website needs to access multiple SQL Servers. IIS is set to
Integrated Windows Authentication. The machine running IIS & the SQL Server
are set to be "trusted for delegation" in active directory. The domain user
accounts that will be accessing the databases are not marked as "Account
is sensitive and cannot be delegated".

The connection string that the web app uses to connect to SQL database is:

"Data Source=PWSSQLT;Integrated Security=SSPI;Initial Catalog=Pace_Master;Persist Security Info=true"

with which the user credentials should be flown to the SQL database.
But instead the delegation fails and results in the following ANONYMOUS authentication failure error:

Login failed for user 'NT AUTHORITYANONYMOUS LOGON'.

Description: An unhandled exception occurred during the execution of the current web request.
Please review the stack trace for more information about the error and where it originated in the code.

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Exception Details: System.Data.SqlClient.SqlException: Login failed for user 'NT AUTHORITYANONYMOUS LOGON'.

Source Error:

// Open the connection, and return it

oConn.Open();
return oConn;


Source File: e:ING eIMSApp_CodeDataAccessConnectionManager.cs

Stack Trace:
[SqlException (0x80131904): Login failed for user 'NT AUTHORITYANONYMOUS LOGON'.]

System.Data.SqlClient.SqlInternalConnection.OnError(SqlException exception, Boolean breakConnection)

System.Data.SqlClient.TdsParser.ThrowExceptionAndWarning(TdsParserStateObject stateObj)
System.Data.SqlClient.TdsParser.Run(RunBehavior runBehavior, SqlCommand cmdHandler, SqlDataReader
dataStream, BulkCopySimpleResultSet bulkCopyHandler, TdsParserStateObject stateObj)

System.Data.SqlClient.SqlInternalConnectionTds.CompleteLogin(Boolean enlistOK)
System.Data.SqlClient.SqlInternalConnectionTds.OpenLoginEnlist(SqlConnection owningObject,
SqlConnectionString connectionOptions, String newPassword, Boolean redirectedUserInstance)
System.Data.SqlClient.SqlInternalConnectionTds..ctor(DbConnectionPoolIdentity identity,
SqlConnectionString connectionOptions, Object providerInfo, String newPassword,
SqlConnection owningObject, Boolean redirectedUserInstance)
System.Data.SqlClient.SqlConnectionFactory.CreateConnection(DbConnectionOptions options,
Object poolGroupProviderInfo, DbConnectionPool pool, DbConnection owningConnection)
System.Data.ProviderBase.DbConnectionFactory.CreatePooledConnection(DbConnection
owningConnection, DbConnectionPool pool, DbConnectionOptions options)
System.Data.ProviderBase.DbConnectionPool.CreateObject(DbConnection owningObject)
System.Data.ProviderBase.DbConnectionPool.UserCreateRequest(DbConnection owningObject)
System.Data.ProviderBase.DbConnectionPool.GetConnection(DbConnection owningObject)

System.Data.ProviderBase.DbConnectionFactory.GetConnection(DbConnection owningConnection)
System.Data.ProviderBase.DbConnectionClosed.OpenConnection(DbConnection outerConnection,
DbConnectionFactory connectionFactory) +105
System.Data.SqlClient.SqlConnection.Open()

INGRS.DataAccess.ConnectionManager.GetConnection() in e:ING eIMSApp_CodeDataAccessConnectionManager.cs:
DAActivity.Page_Load(Object sender, EventArgs e) in e:ING eIMSDADAStatusDAActivity.aspx.cs
System.Web.Util.CalliHelper.EventArgFunctionCaller(IntPtr fp, Object o, Object t, EventArgs e)

System.Web.Util.CalliEventHandlerDelegateProxy.Callback(Object sender, EventArgs e)
System.Web.UI.Control.OnLoad(EventArgs e)
System.Web.UI.Control.LoadRecursive()

System.Web.UI.Page.ProcessRequestMain(Boolean includeStagesBeforeAsyncPoint, Boolean includeStagesAfterAsyncPoint)
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Version Information: Microsoft .NET Framework Version:2.0.50727.42; ASP.NET Version:2.0.50727.210
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