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Where does "authentication" get its credentials?

Let's say you create a Virual Directory on your Web Site that points to a shared file on another server. You are using NTFS authentication/security for access to the folders/Web pages beneath that shared file (and all of your Web site for that matter). Does authentication use the credentials you used (when prompted) to initially create the Vitrual Directory, or does it use the credentials from the user that actually authenticated the Web Site?
IIS uses the username and password you enter into the Internet Services Manager only to authenticate for the purposes of accessing the network share. In other words, the user account you provide to IIS only needs *share* permissions. All file permissions are handled using the account provided through the user's browser--or the anonymous IIS account, if applicable.

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