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Event ID: 32041 Source: MicrosoftFax

Fax Service failed to initialize because of an internal error

Win32 Error Code: 1307.
This error code indicates the cause of the error.
Go to Start -> Run, type services.msc, and press Enter. Right-click the service Fax, go to the tab Log On, and make sure that in the “This account” section, the NT AUTHORITY\NetworkService account is specified. Verify that the password set is blank, click “Apply”, and restart the service.
I had this problem as well. My original Domain Controller was a Windows 2000 Server Standard. I have then added a Windows 2003 Standard Server, and promoted it to DC. Replication was occurring without problems. The account needed for the fax service is Network Service Account. The promotion caused special accounts to be disabled because Windows 2000 was the FSMO. As per ME827016, I transferred the FSMO roles to the Windows 2003 server. The Network Service account re-appeared.
Next, I went to the Domain Controller Security Policy -> local policies -> user rights assignment. I have added the restored account NETWORK SERVICE to the following:
- Replace a process level token.
- Generate security audits.
- Adjust memory quotas for a process.
- Logon as a service.
After this, I have added the accounts “Local System” and “Administrators” to "Generate Security Audits". I restarted the fax service and all worked well.

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