Well for a start, if you are trying to implement load balancing, do you think it is clever to load up Server 2 with all the file system calls for Server 1 application across to the shared folder on server 1??? Give 2copies of the application, one on server 1 and 1 on server 2.
As for the problem you mention, it is all do do with permissions on the source folder, you need to add permissions to the security groups that can access and execute on the shared folder to ensure they include the accounts for server 2.
Have you looked at the ASP.net webfarm framework?
Introducing the Webfarm Framework[
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