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Replication error between two standalone servers with same local and sa accounts

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QUESTION POSED ON: 29 June 2004
I'm trying to set up snapshot replication between two SQL Server 2000 Standard SP3 servers. Both servers are standalone servers and not part of any domain, both servers have the same local admin account and password, and both have the same sa account and password. For some reason I'm able to see the servers on both sides, and I'm able to access the files at the subscriber server (using Explorer), but I get this error when the sync runs: 
The process could not read file 
'serverE$MSSQLReplicationuncBLUEFISH_DB_DB20040609230503navDaily_1.sch' 
due to OS error 5.

Access is denied.
(Source:  (OS); Error number: 5)

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You can not use local system for an account. This account must be a named account in order to run. Additionally, the account that SQL Server Agent is running under needs to have access. In this particular case, you are running the snapshot through a scheduled job and the snapshot is residing in an administrative share. That means the account that SQL Server Agent is running under needs to be a local administrator in order to have visibility to the share.

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