I'm trying to set a Domain User account as ApplicationPool Identity in IIS 8 (Windows 2012). When trying this using the IIS Management Console I always get an error:

Value does not fall within the expected range.

When trying to set the identity using appcmd.exe it fails on both the command setting the username and password or the command only setting the password. Setting the username is no problem.

Trying to set both the username and password [FAIL]:

>appcmd set config /section:applicationPools /[name='AppPoolName'].processModel.identityType:SpecificUser /[name='AppPoolName'].processModel.userName:DOMAIN\Username /[name='AppPoolName'].processModel.password:P4ssW0rd
Applied configuration changes to section "system.applicationHost/applicationPools" for "MACHINE/WEBROOT/APPHOST" at configuration commit path "MACHINE/WEBROOT/APPHOST"
ERROR ( hresult:80070057, message:Failed to commit configuration changes. The parameter is incorrect. )

Trying to set only the username [SUCCESS]:

>appcmd set config /section:applicationPools /[name='AppPoolName'].processModel.identityType:SpecificUser /[name='AppPoolName'].processModel.userName:DOMAIN\Username
Applied configuration changes to section "system.applicationHost/applicationPools" for "MACHINE/WEBROOT/APPHOST" at configuration commit path "MACHINE/WEBROOT/APPHOST"

Trying to set the password after successfully setting the username [FAIL]:

>appcmd set config /section:applicationPools /[name='AppPoolName'].processModel.identityType:SpecificUser /[name='AppPoolName'].processModel.password:P4ssW0rd
Applied configuration changes to section "system.applicationHost/applicationPools" for "MACHINE/WEBROOT/APPHOST" at configuration commit path "MACHINE/WEBROOT/APPHOST"
ERROR ( hresult:80070057, message:Failed to commit configuration changes. The parameter is incorrect. )

I added the Domain User to the IIS_IUSRS group and allowed it to "Log on as a service".

Any suggestions what I might be doing wrong?