I have two SQL servers, each running on their own Windows server. The versions of both Windows and SQL Server are the same, they are on the same domain, they're virtually identical.
On these servers, I have set up credentials for a domain service account (sa_abc), I've added sa_abc as a CmdExec proxy in the SQL Agent, I've created a job with one step (a CmdExec step with time /t > d:\temp.txt ).
On one server this job runs fine and the result is what I'd expect: a txt file on the root of the D; drive with the time of running printed in it. On the second server this job fails with the error:
Unable to start execution of step 1 (reason: Error authenticating proxy Domain\sa_abc, system error: The user name or password is incorrect.). The step failed.
I've validated that the domain account is indeed valid; I have a Powershell script that takes a username/password and validates it against the Active Directory. This seems to rule out any conflict with the DC.