Receiving a System.Net.WebPermission Error when calling functions

[Steve]

I've written a very basic web service that returns the time on the server to
test our new web server with web services and let me learn the stup
procedures. The server is a W2K SP 4 server with IIS 3.0.

I have IIS configured to use anonymous with the specific account
"DOMAIN\SIMUSER" and a password, and the web service in the folder
Inetpub\wwwroot\WebService.

I can add the reference to my test project, on my machine and can see all
the available methods etc. The web service is on a remote machine, the test
project on my local.

The problem is when I call the string GetTime() method I get the below error.

<IPermission class="System.Net.WebPermission, System, Version=1.0.5000.0,
Culture=neutral, PublicKeyToken=b77a5c561934e089"
The program '[1232] MyTestApp.exe' has exited with code 0 (0x0).
version="1">
<ConnectAccess>
<URI uri="http://localhost/MyTestService/Service1\.asmx"/>
</ConnectAccess>
</IPermission>

I've tried going back to the default IUSR_**** account but it doesn't seem
to fix it. I have the identity impersonate set to true with Windows
authentication.

Help??