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I have two SQL Server 2008 R2 instances installed on same Server and the engine log on as Network Service account which is set by installation.

there is a database TestDB on both instances. I try to setup database mirror for this case and I failed with following error:
The server network address "TCP://myserver.mycompany.com:5023" can not be reached or does not exist. Check the network address name and that the ports for the local and remote endpoints are operational. (Microsoft SQL Server, Error: 1418)

Then I change the account to Local System for engine and restart sql server service and I am able to setup mirror.

How to resolve this problem if I want to keep Network Service to run the engine service?

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What does, sys.database_mirroring_endpoints joined with sys.tcp_endpoints on the principle and mirror say? –  RateControl Dec 12 '13 at 13:44
    
Why doný you want to use a local system account or why not create a local or domain account. The network service account has it's limitations msdn.microsoft.com/en-us/library/windows/desktop/… –  Boris Dec 12 '13 at 20:37

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