Ian,
With SQL server you could use SQL authentication (SQL-specific username and password in your connection string) instead of integrated authentication, to solve this issue. Otherwise, with integrated authentication, you are accessing SQL server with the identity of the user running the program. NETWORK SERVICE is a restricted user, locked down for the purpose of running application facing lots of potential hacking threats, like internet-facing apps, or web apps facing corporate network where malicious actors are possible. Keeping NETWORK USER for your web application is a good idea to reduce chances of hacking. If your app runs under LOCAL SYSTEM and is successfully hacked, the attacker gets full control of your system and can access every file on the computer.
We recommend that you learn a little bit more about SQL access authorization. This issue is pretty general rather than UltiDev-specific, so your will get better support at StackOverflow.com.
Best regards,
UltiDev Team.
Please donate at
http://www.ultidev.com/products/Donate.aspx to help us improve our products.