Hi
I think what might be happening is that you are getting a 401 - permission denied but as to whom the permission is denied to is unclear. I am guessing at this point you have checked the NTFS permissions on the machine, and have confirmed that you do have access.
Next I would look at what account the application pool uses. If it is the default setup, it will probably be the NT Network Service Account. If that is the case, confirm that the account does have access to the application directory. If that is also the case it might perhaps be a COM+ security setting. By default your network service account does not have permission to remotely launch components. If this is the case you will be seeing errors in the system and security log that will say things link, "Unable to launch component "
Looking at the IIS log files and the system and security event logs on the iis server often yield more clues.
Hope it helps
Best Regards
Rihan Meij