MS Access – Protecting Backend File

I'll just summarize all my comments here as an answer.

You should read this:

http://msdn.microsoft.com/en-us/library/ms143504%28v=sql.105%29.aspx#Use_startup_accounts

The SQL Server Service is the SQL Server engine and runs under an account specified for the service and linked servers which use a file share will necessarily use those permissions, since there is no setting to have the Server Service impersonate another account when it connects through the filesystem.

The SQL Server Agent is a separate process which runs scheduled jobs. If you use this and it connects to network shares on its own (not just telling SQL Server engine to run some statement against a linked server which would be under the engine permissions above), it would need to run under an appropriate domain account. In your case, that doesn't appear to be running, so I wouldn't bother fooling with it.

Running the SQL Server Express has certain database size and functionality limitations, and I wouldn't consider it for general server-class production use except for high numbers of lightweight servers - for instance a deployment of an small inhouse application to several worksites - where you wouldn't want to pay for licensing and the requirements fit the product.

The built in network account is "NT AUTHORITY\NETWORK SERVICE" and you can just put that in and blank out the passwords to restore it.

If you switch the SQL Server Service to run as a domain account, you will need to give it sufficient permissions to access the OS on the database server - i.e. folder access to where the database files are if the account doesn't have access.

The Timeout Expired error you're seeing is very likely due to how Microsoft Access fetches rows from SQL Server. If, for instance, the form in question uses data-binding to populate controls on the form with data from SQL Server, and there is no filter on the form that selects a SINGLE row of data, Access will keep the results open, and "page" through the rows one single row at a time. This will prevent others from updating any of the rows in the table.

For a system used by 1,000 users, you should never ever use Access as a front-end, as tempting as that may be. Use Access (it you must) as a rapid design prototyping tool, then build out the real solution using Visual Studio or some other enterprise-level development software.