SQL Server for DotNetNuke is inside our Company's network.

The Web Server where the DotNetNuke application resides is in our DMZ (firewall separates internal network from perimeter network).

Local Account was created on SQL Server, Local Account added as a Windows Account Login, Local Account added as a User with DBO privs to the DotNetNuke database.

Local Account was created on Web Server, this is the same username/password that was created on the SQL Server database.  Application Pool setup to run under the context of the Local Account.  An application pool controls performance, recycling of processes and most importantly for trusted connections the security context an application runs under. Again you must create a mirrored username and password on both the IIS server and the SQL server.

Using trusted SQL Connections, the username and password are not stored in clear text in the web.config file.  The DotNetNuke application works great until you try and use Windows Authentication to Active Directory since the Local Account the application pool is running under does not have access to Active Directory.  The following are the errors when you try activating Windows Authentication:  Accessing Global Catalog fails, Checking Root Domain fails, Accessing LDAP fails, Could not find domains in Network.

With the above architecture setup, can you get Trusted Connections to the database to work along-side Active Directory Integration when you are using a mirrored Local Account to get trusted connections to work? 

When changing the above setup to use SQL Connections (username/password stored in clear text in web.config) and having the Application Pool run as a Network Service, all works well. 

We really want to use trusted SQL connections with Active Directory integration, any insights to this problem would greatly be appreciated.