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I was able to get Application Pool Identity to work properly, I even was able to get it to access remote SQL Server database successfully. I documented the steps in an answer to another stackoverflow question.

Still, all applications hosted in the same machine are able to access the remote database, which makes sense as I add the SQL Server account with machine name <My Domain>\<My Machine>$, not account name.

Now, my question is: how to allow only a certain application to access the remote database, not any application on the machine?

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Sameh Deabes
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You can't using Application Pool Identity accounts. If you want to allow only specific applications to access the database you need set the application pool identity to a Managed Service Account or a domain account. Managed Service accounts were introduced in Windows Server 2008 R2 and Windows 7. There is an advantage on using Managed Service Accounts: you don't need to manage its password, however there is no GUI to manage them.

Here you have an article introducing to to Managed Service Accounts:

Introducing Managed Service Accounts

Jesús López
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