This technical paper will help you implement VMware’s VM encryption as well as implement Veeam encryption which together will achieve the nothing ever in the clear goal. If a bad guy steals VMs, backups or traffic they get nothing.
I also see this: The server is configured to use pass-through authentication with a built-in account to access the specified physical path. However, IIS Manager cannot verify whether the built-in account has access. Make sure that the application pool identity has Read access to the physical path. If this server is joined to a domain, and the application pool identity is NetworkService or LocalSystem, verify that <domain>\<computer_name>$ has Read access to the physical path. Then test these settings again.
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