Unable to authenticate proxy when starting SQL snapshot agent

I have a Windows Server 2008 R2 install running SQL Server 2008 R2 with all the latest updates etc applied,

I have restored a database from an old image (SQL 2005) and am trying to get web-sync working with merge subscriptions.

However when I attempt to start the SQL Snapshot Agent on the distribution I have defined I get this error:

Unable to start execution of step 2 (reason: Error authenticating proxy SERVER-NAME\Administrator, system error: Logon failure: unknown user name or bad password.). The step failed.

I am starting the agent as the computer admin and am not using a proxy server.

Any ideas on why this might show up?

See below:

The params used by the SQL Snapshot agent are:

-Publication

-Publisher

-Distributor

-PublisherDB

-ReplicationType

If you are using SQL Server Authentication (I am), you must also specify the following arguments:

-DistributorLogin

-DistributorPassword

-DistributorSecurityMode = 0

-PublisherLogin

-PublisherPassword

-PublisherSecurityMode = 0