Microsoft Knowledge Base Article 300985 contains the following summary:
The World Wide Web (WWW) and FTP services that are included with Microsoft Internet Information Server and Microsoft Internet Information Services are fully integrated with Windows 2000 user accounts and file access permissions.
Every access to a resource (for example, a file, an HTML page, or an Internet Server API (ISAPI) program) is performed by the services on behalf of a Windows user. The service impersonates the user by supplying a user name and password pair in the attempt to read or run the resource for the client.
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