When authenticating connections with username/password, PowerShell Server will attempt to logon the user to verify his/her credentials. By default, the server will attempt what is known as a “Network Logon”, which is more secure because it restricts the authenticated credentials to accessing local resources. This means that, by default, connections will very likely be allowed access only to resources in the local machine that PowerShell Server is running and not any remote network resources (like shared folders, or other servers).

If you want authenticated connections to have access to remote network resources under the credentials used for authentication, then the server needs to authenticate users in a different way, by doing an “Interactive Logon” instead.

This can be enabled at the server level by setting the Logon Type setting on the Security tab to “Interactive Logon”.

For details on using Isolated Sessions and Impersonation with PowerShell Server, please see this article.