SmartObjectServer Exception - 401 Unauthorized error

The SmartObject Service Instance Synchronization Tool fails and displays the following message: 

 

Solution:

The following actions can be followed to correct this problem:

• Check the IIS logs for the 401 error to see what user is being passed to runtime services
• You might also want to try opening the relevant asmx URL in the browser from the machine you are running the tool. This is just to verify that there are no odd permission or configuration issues. This is usually a cause if there is no Kerberos delegation issues involved (especially for IIS7)