But that's a rather unusual message to be getting for a security-related problem. Normally, I would expect security-related messages to be along the lines of "Permission denied".
"No such file or directory" usually means simply "no such file or directory", and can often indicate that the cwd is not what you expect it to be - especially where IIS is concerned. So ... if you don't make progress by looking at the user account, take a look at what the cwd is and see if that helps. (There's no guarantee that it will :-)