1. Navigate to Enterprise>>System Options>> SDMS Integration. Ensure the Fallback Authentication method is set as "Standard", with specific user name and password filled in and the box of "Remember user and password:" is checked.
Note: The usual setting is to have the primary method configured as windows, and the fallback as "standard" with credentials like the default one or other valid SDMS user account, with the checkbox to remember the username and password checked.
When running under Web Data Entry, it tries integrated login and it would be as the user credentials of the web data entry app pool. That, apparently, is "local system." Since that is expected to fail, as there would be no integrated windows user account in SDMS for the local system identity. It would normally then use the fallback authentication, which needs to be a specific SDMS user and password.