I\'ve searched thoroughly- apologies in advance if I am missing an obvious answer. Followed the recommendations at link below and the solution did not work. The so
I know this question is old, but since I suffered till I got it work, I'd like to share my experience to answer this question.
The steps you have followed worked with me, except :
3- The account you need to add to sql server logins is mydomain\machine1$ not mydomain\machine1$\IIS APPPOOL\MyAppPoolName
4- leave every thing in general settings page as defaults (actually, you need to make sure you are using windows authentication).
Then Go to User Mappings | select the database you want your application to access | grant it whatever permissions you want. For example, give it db_datareader & db_datawriter permissions.
5- Click OK to save.
But be ware that all applications using virtual accounts from same machine will be able to access this database.