I am also having similar case: everything works fine locally (I was able to do change passwords, skins, etc.), but I get "login failed ... network services.." when I try to access remotely. I have already setup permission for networkservices as well aspnet.

I am using WS2003, IIS6, SQL2005 Express with SQL studio express, and DNN 4.03. I used started kit with default database.mdf to create a localhost portal. I have used both .\sqlexpress as well as servername\sqlexpress in <connectionsetting> and <appsetting> with no sucess for remote access.

What I don't understand is that I cannot setup permission for "aspnet," "networkservices" or "MyID" in default database explorer in VWD. If I setup a different database in SQL studio and make changes accordingly in web.config, my localhost access comes with database errors.

Any good soul out there? Would really appreciate.

Finally! I figured out the problem, I think; Now I can access the portal remotely. Here are a few things that I did--I hope these would be helpful to frustrated users like me:

1. Thanks to these posters. It would have been much easier, had I seen their step-by-step instructions earlier. Please read carefully the first posting.
http://www.dotnetnuke.com/Community/ForumsDotNetNuke/tabid/795/forumid/107/threadid/39895/scope/posts/Default.aspx
http://www.dotnetnuke.com/Community/ForumsDotNetNuke/tabid/795/forumid/107/threadid/21459/scope/posts/Default.aspx
http://www.getindigo.com/Products/DNN/FAQ.aspx

2. The problem really was in setting permission for NETWORK SERVICE (or ASPNET in XP and 2000), which resulted in "failed connectivity" or "failed login." I used SQL studio (not just SQL Explorer in VWD) and created a new database with NETWORK SERVICE and MyID as users and all other appropriate security settings. I then used the new database in SQL explorer and made all other necessary changes in web.config (see the 1st posting by Kimberly).

3. As for the remote access problem, I think one has to has make sure that two things: I. check IIS6 setting (e.g., ASPnet, Default.aspx, home directory, security setting, annonymous login, etc) and make sure other HTML sites are working fine, and II. create an alias like http://www.yoursite.com/dotnetnuke within DNN host site setting.
http://www.microsoft.com/technet/community/columns/insider/iisi0106.mspx#EFB