File access permission to remote system's local users

Two systems in same domain, both are running in server 2003 OS, i have to share a folder in the first server and provide file sharing permission to a local user in another system. when i try to give permission AD is picking the 2nd server name,but its not picking up the local user in the second system.
please help me in this sharing issue.

If your dealing with just local accounts and not domain accounts. The only thing i've found that works is make the same account name on both machines. So if the username is frank make sure frank is on both machines with the same password.