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SQL Agent - Error Authenticating Proxy

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I am having an issue when scheduling an SSIS package on a Production environment (via SQL Agent, utilizing a Credential/Proxy). I have worked through the steps below in a Test environment and have not had any problems. Here's what I've done in Production (on a SQL Server 2008 R2 non-clustered environment):

- Copied SSIS package to file system (NTFS permissions are set properly)

- Created a Credential and Proxy (for a Windows user)

- Created SQL Agent job to execute the SSIS package

- Executed the job and receive the following error: 

"Unable to start execution of step 1 (reason: Error authenticating proxy DOMAIN/user, system error: Logon failure: unknown user name or bad password.).  The step failed."

Can someone help me work through this? I have tested the process above with a blank SSIS package, so I know it has nothing to do with access to the source systems. The issue resides specifically on the SQL Server box that is running SSIS and SQL Agent.

I have done some reading and found the following:

- Delegate permissions to SQL Agent account...

- Provide "Log on as a batch job" permissions to AD user

- Install a KB to fix...

Not sure what to puruse at this point. Also, the Job will run just fine using the SQL Agent service account; however, I need to run this user as a different account.

Please advise.



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