Reason: Using built-in accounts as application pool identities or as service identities is not supported in a farm configuration. Built-in accounts include Network Service, Local Service, and Local System.
Resolution: Change the identity that is used for the service or application pool
1. Verify that the user account that is performing this procedure is a member of the Farm Administrators SharePoint group.
2. On the Central Administration Home page, click Security.
3. On the Security page, in the General Security section, click Configure service accounts.
4. On the Service Accounts page, in the Credential Management section, in the upper drop-down list, click the service or application pool for which you want to change the identity.
5. In the Select an account for this component list, click the domain user account that you want to associate with the service or application pool.
If you want to register the account that you selected on the SharePoint Foundation 2010 farm, click Register Managed Account.
6. Click OK.