"Cannot open log for source." Application not having access rights

I am trying to solve a problem that we have with our application not having
access rights writing to the event log.

An error occurred while invoking web service
"StartRequest@http://localhost/ApplicationX/WebServices/Handler.asmx" using
network credentials "USER"

Reason:System.Web.Services.Protocols.SoapException : Server was unable to
process request. ---> System.InvalidOperationException: Cannot open log for
source 'ApplicationX'. You may not have write access. --->
System.ComponentModel.Win32Exception: Access is denied

--- End of inner exception stack trace ---

at System.Diagnostics.EventLog.OpenForWrite(String currentMachineName)



We usually solve the problem using this article:
http://support.microsoft.com/default...b;en-us;323076

Adding (A;; 0x3;;;AU) in the access rights in the CustomSD normally solves
the problem as USER is a Authenticated User on the machine.

This time the problem is not being fixed.

After adding the value (A;; 0x3;;;AU) to the CustomSD the problem is solved
for a little while (1-2 hours), and the access right is being set to
(A;;CCDC;;;AU). After it has been set to this value the application is not
able to write to the eventlogsource.

I have also tried using this hotfix without having any luck:
http://support.microsoft.com/kb/939960

The server is a Windows Server 2003 not in a domain.

Any suggestions?