Sql-server – Cannot add an account [non domain account ] to SQL Server 2012

Background:

I have a application pool [ABCDEMO] in IIS. The identity of the appool is "NetworkService". I am trying to add IIS APPPOOL\ABCDEMO to my SQL SERVER 2012 on a Windows SERVER 2012.

When I try to add to the Logins I get the following error.

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Create failed for Login 'IIS APPPOOL\ABCDEMO'.  (Microsoft.SqlServer.Smo)

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For help, click: http://go.microsoft.com/fwlink?ProdName=Microsoft+SQL+Server&ProdVer=11.0.2100.60+((SQL11_RTM).120210-1917+)&EvtSrc=Microsoft.SqlServer.Management.Smo.ExceptionTemplates.FailedOperationExceptionText&EvtID=Create+Login&LinkId=20476

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Program Location:

   at Microsoft.SqlServer.Management.Smo.SqlSmoObject.CreateImpl()
   at Microsoft.SqlServer.Management.SqlManagerUI.CreateLoginData.LoginPrototype.ApplyGeneralChanges(Server server)
   at Microsoft.SqlServer.Management.SqlManagerUI.CreateLogin.DoPreProcessExecution(RunType runType, ExecutionMode& executionResult)
   at Microsoft.SqlServer.Management.SqlMgmt.SqlMgmtTreeViewControl.DoPreProcessExecutionAndRunViews(RunType runType)
   at Microsoft.SqlServer.Management.SqlMgmt.SqlMgmtTreeViewControl.ExecuteForSql(PreProcessExecutionInfo executionInfo, ExecutionMode& executionResult)
   at Microsoft.SqlServer.Management.SqlMgmt.SqlMgmtTreeViewControl.Microsoft.SqlServer.Management.SqlMgmt.IExecutionAwareSqlControlCollection.PreProcessExecution(PreProcessExecutionInfo executionInfo, ExecutionMode& executionResult)
   at Microsoft.SqlServer.Management.SqlMgmt.ViewSwitcherControlsManager.RunNow(RunType runType, Object sender)

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An exception occurred while executing a Transact-SQL statement or batch. (Microsoft.SqlServer.ConnectionInfo)

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Program Location:

   at Microsoft.SqlServer.Management.Common.ServerConnection.ExecuteNonQuery(String sqlCommand, ExecutionTypes executionType)
   at Microsoft.SqlServer.Management.Common.ServerConnection.ExecuteNonQuery(StringCollection sqlCommands, ExecutionTypes executionType)
   at Microsoft.SqlServer.Management.Smo.ExecutionManager.ExecuteNonQuery(StringCollection queries)
   at Microsoft.SqlServer.Management.Smo.SqlSmoObject.ExecuteNonQuery(StringCollection queries, Boolean includeDbContext)
   at Microsoft.SqlServer.Management.Smo.SqlSmoObject.CreateImplFinish(StringCollection createQuery, ScriptingPreferences sp)
   at Microsoft.SqlServer.Management.Smo.SqlSmoObject.CreateImpl()

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Windows NT user or group 'IIS APPPOOL\ABCDEMO' not found. Check the name again. (.Net SqlClient Data Provider)

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For help, click: http://go.microsoft.com/fwlink?ProdName=Microsoft%20SQL%20Server&ProdVer=11.00.2100&EvtSrc=MSSQLServer&EvtID=15401&LinkId=20476

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Server Name: USALVWCOQA10
Error Number: 15401
Severity: 16
State: 1
Line Number: 1


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Program Location:

   at Microsoft.SqlServer.Management.Common.ConnectionManager.ExecuteTSql(ExecuteTSqlAction action, Object execObject, DataSet fillDataSet, Boolean catchException)
   at Microsoft.SqlServer.Management.Common.ServerConnection.ExecuteNonQuery(String sqlCommand, ExecutionTypes executionType)