After you have created a virtual directory in Microsoft Internet
Information Server (IIS) that is mapped to a Uniform Naming Convention
(UNC) path, you attempt to convert the virtual directory to a sub Web. At
the end of the conversion, you get the following error message:
Server Error: "Cannot read or set the permissions for file, \\server\web\:
initializing the SD failed".
If you do succeed without receiving this error message, you will still get
it by opening the Web in FrontPage and viewing permissions.
You will also note that FrontPage also incorrectly modified the
permissions on the UNC folder attempting to apply the correct permissions.
The access control lists (ACLs) will show Account Unknown because the
accounts do not exist on the computer the UNC path points to.