SQL Server 2005 Transactional Replication problem

[ceadtinneh]

First a bit about what I' trying to do.

I'm running SQL Server 2005 Developer edition on my dev box. I've got
two instances set up and am trying to set up transactional replication
(with both immediate and queued updates) between the two instances.

The windows account I'm using to run the replication agents (dist,
logreader, snapshot and queuereader) is a domain account with the same
rights as the SQLServerAgent on my box.

Thus far I've:

1) Distributor and publisher have been set up on the same instance
2) Given this account logins on both instances
3) Made it db_owner in the distribution database
4) Made sure its in the PAL
5) Made it a user in the replicated db on both the subscriber and
publisher.
6) Seems the process to set up the publication has set up all the
right crendentials for the proxies to use.

Using SSMS I tested the login on both instances. When setting up agent
security, I used this account for all of the above agents.

Snapshot and LogReader agents work fine. QueueReader and Distribution
agent fail with the following message:
"Unable to start execution of step 2 (reason: Error authenticating
proxy mydomain\window saccount, system error: Logon failure: unknown
user name or bad password.). The step failed.
"

Am I correct in assuming that the login failure is occurring on the
subscriber instance? If so, why's it happening?

Any insight would be hugely appreciated

Thanks,
Joe