To amplify on Crackers2's comment, one of the things that the "Local System account" in Windows does not have is network access; it has no credentials that are valid across systems.

You can double click on your service in Control Panel -> Admin Tools -> Services, select the Log On tab, and enter an appropriate user account and password. This can be a domain account if the local and remote machines are in the same domain, or, by typing in the machinename\userid, an account on the remote machine.